Understanding ESOPs

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Sanjay Sharma (Querist)
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05 March 2010 In a private limited company a person is among the first Directors of the company with his name appearing in MOA & AOA. His equity in the company increases gradually in the company say upto 8% from 2% (in MOA & AOA). Does the equity hold by the Director falls under ESOPs? Now if the Director is removed from the company then how can shares to be taken back from him? What if he shows willingness to sell the shares but rest of the shareholders are not interested in purchasing his shares?

CS REMESH B

CS REMESH B (Expert)
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15 March 2010 The equity share held by the ex-director does not fall under ESOPs since you have not allotted the share under ESOP scheme. I think the shares were allotted as an ordinary allotment. The Co. can not buy back shares from him without his consent. For share transfer matters please go through the specific clauses in co.'s Articles of Association. If the other shareholders are not willing to purchase the shares from him, the Articles will have clauses in this regard. Or not, you may alter the AoA at an EGM by passing a spl resl