ESOPs are central to startup hiring and retention. A well-designed ESOP pool can attract senior talent, align employees with the company's growth, and create long-term wealth. A poorly drafted scheme leads to legal non-compliance, tax surprises, and disputes during funding or exit events.
Design the ESOP pool, draft the scheme, and obtain board and shareholder approval.
Allocate grants to senior hires, manage vesting, and handle exercise during funding rounds.
Coordinate ESOP pool size with investor expectations and 409A / India valuation reports.
Understand vesting schedule, exercise price, tax at grant, exercise, and sale, and FMV rules.
Drafting a new ESOP scheme before the first hire, granting ESOPs to senior employees, accelerating vesting on a change of control, handling exercise of options at the time of funding, paying perquisite tax at exercise, and reporting ESOPs in Form 24Q, international employees, and NRI tax treatment.
ESOPs are taxed at three stages: perquisite (salary) tax at exercise, capital gains at sale, and cess/surcharge as applicable. The perquisite value is calculated using the FMV on the date of exercise minus the exercise price. ESOPs granted to international employees (including NRIs) have specific FEMA and DTAA implications.
We draft ESOP schemes, file the required board and shareholder resolutions, register the scheme with the ROC, and help you manage grant letters, vesting schedules, and exercise events. We also coordinate with chartered accountants for valuation and tax planning at exercise and sale.
