Life Cycle of ESOP

  • Granting of option by employer
  • Vesting of options on completion of vesting period/conditions
  • Option holder can Exercise the vested options by paying the exercise price and taxes
  • Employer will then allot shares against the options exercised
  • Employee is at the option to sell or hold the shares


Things to know on ESOP

    There shall be a minimum period of one year between the grant of option and vesting of option.

    Companies issuing ESOP must have proper accounting records of the transactions in complianes with Companies Act, 2013 and IND AS (Accounting Standards).

    There is no statutory limit for stake reserved for the purpose of ESOP . This completely depends upon the objective of the of the ESOP plan, the frequency of the ESOP grant in the company and company’s internal policies and mechanisms.

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