Routes Of ESOPS


Steps under the Direct route

  1. Company froms an compensation committee and define the eligibility criteria of ESOPs
  2. Issue fresh shares for ESOPs.
  3. After vesting period employee can exercise the option.
  4. On exercise of an option company issue the shares to the employees.


Steps under the Trust route

  1. Company forms an employee welfare trust.
  2. Company grants loan to the trust for subscribing shares.
  3. Company issues fresh shares to the trust and options to the employees.
  4. Employee exercises the options.
  5. Trust transfers the shares to the employee upon receipt of exercise price.
  6. Trust repays the loan to the company.

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Ms. Mohini Varshenya

Partner & Head-ESOP Services

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