Before you begin to roll out those stock options to your team, hold up.
Without a Scheme (used synonymously with Policy in common parlance) that has been through the necessary steps and processes, the ESOPs you offer to people are invalid and might put you in a giant legal mess later in your journey.
But don’t fret, we’ve got your back!
A simple scroll through this guide should answer most of your questions.
Create a Scheme according to the Companies Act
The first step in creating an ESOP scheme is to ensure that it complies with the provisions of the Companies Act, 2013.
The scheme should dictate the purpose and objectives of the plan, including eligibility criteria for participation, the number of shares to be granted, and the vesting period.
If you need help figuring out the benchmarks, and what constitutes a “good policy”, we have a guide for that as well!
Call a Board meeting to pass resolution
Post drafting the Scheme, it must be approved by the Board of Directors. The Board must pass a resolution recommending the ESOP Scheme and authorizing the issuance of shares to eligible employees.
Get shareholder approval
The most important step!
After the Board recommends the ESOP Scheme, it must be approved by shareholders of the company.
Send grant letters to employees and maintain a register
Time to get them rolling! 🎉
Once the ESOP Scheme is approved, eligible employees must be informed of their entitlement to participate in the plan.
The company has to issue a grant letter to each eligible employee, outlining the terms and conditions of the plan, including the number of shares granted, the vesting period, and the exercise price.
Additionally, you should also maintain a register of all employees who have been granted shares under the ESOP policy.
That’s where Infinyte Owners comes in. You can use it to track and maintain your ESOPs, and your team will be able to visualize their stock options the way they are meant to — a life-changing way to actively participate in the growth of the company they are helping build.
The platform is free-to-use and built keeping the builders in builders in mind. Get in touch with us, and we will take care of everything else.