Esop
This query is : Resolved
24 August 2016
Hi All,
Background :
1.XYZ private limited is valued at Rs.8,00,00,000 in its current round of funding. The company has issued Compulsorily convertible preference shares {CCPS} in lieu of the funding wherein each share is value at Rs.23000 approx.
2. The said company has offered ESOP to an employee worth Rs.1,00,000.
This would mean that the company has to offer the employee 4.35 options { 100000/23000 assuming each option has underlying asset of 1CCPS}
Kindly let me know if my understanding is correct ?
Further, throw some light on the following points :
1. In case the company wants to issue ESOPs worth only 20000 to an employee, How can this be done ?
2. Can the company have only 0.1 CCPS as the underlying asset of each option and thereby grant 43.47 options each at a value of Rs.2300 {2300*43.47=100,000}
3. Can the company have different exercise price for different esop offered at different periods ?
4. Can the company have different valuations for ESOP's offered at different periods ?
Background :
1.XYZ private limited is valued at Rs.8,00,00,000 in its current round of funding. The company has issued Compulsorily convertible preference shares {CCPS} in lieu of the funding wherein each share is value at Rs.23000 approx.
2. The said company has offered ESOP to an employee worth Rs.1,00,000.
This would mean that the company has to offer the employee 4.35 options { 100000/23000 assuming each option has underlying asset of 1CCPS}
Kindly let me know if my understanding is correct ?
Further, throw some light on the following points :
1. In case the company wants to issue ESOPs worth only 20000 to an employee, How can this be done ?
2. Can the company have only 0.1 CCPS as the underlying asset of each option and thereby grant 43.47 options each at a value of Rs.2300 {2300*43.47=100,000}
3. Can the company have different exercise price for different esop offered at different periods ?
4. Can the company have different valuations for ESOP's offered at different periods ?
24 August 2016
04. yes
03. yes
02. please elaborate a bit......not able to get what you aim at
01. if company wants to issue ESOP worth less than actual value....it is normally compensated by "restriction on transfer"
03. yes
02. please elaborate a bit......not able to get what you aim at
01. if company wants to issue ESOP worth less than actual value....it is normally compensated by "restriction on transfer"
24 August 2016
Explaination for Point Number 2 : For eg the underlying asset for 1option granted is 1ccps.
The company wishes to make it 1esop=0.1 CCPS
Further, now that we can issue esop at a value less that 23000 it would create a advantage to an employee of Rs.3000 { ESOP value is Rs.20000 and the value of share is 23000}.
Kindly clarify that the minimum shares to be offered is 1in number.{the company wishes to restrict the benefit only to 20000}. Kindly provide legal support for your views too justify.
The company wishes to make it 1esop=0.1 CCPS
Further, now that we can issue esop at a value less that 23000 it would create a advantage to an employee of Rs.3000 { ESOP value is Rs.20000 and the value of share is 23000}.
Kindly clarify that the minimum shares to be offered is 1in number.{the company wishes to restrict the benefit only to 20000}. Kindly provide legal support for your views too justify.
24 August 2016
minimum share should be ONE......can NOT be less than that
24 August 2016
Thank you sir..
can you pls state a legal provision supporting the same
can you pls state a legal provision supporting the same
24 August 2016
authorised capital clause empowers the company to issue shares.......Is there any provision of fractional shares in authorised capital clause?
27 August 2016
Hi Sir,
The capital clause of MOA does not contain anything regarding fractional shares. What can be done in this case ?
The capital clause of MOA does not contain anything regarding fractional shares. What can be done in this case ?
27 August 2016
you need to incorporate the provision of fractional shares... Be in touch with some good practising Company Secretary
29 August 2016
you are most welcome.
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