ESOP and ESPS

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CS Raj Kashyap (Querist)
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09 June 2011 Dear Friends,

I am in search for the detailed and elaborate procedure step wise for handling and implentation of ESOP and ESPS.

Please do suggest.

Regards
Raj

Saroja

Saroja (Expert)
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09 June 2011 Hi raj,

for ESOP:

ESOP ACTIVITY CHART – CHECK-LIST

Activity
1. Board Meeting for authorizing Compensation Committee to frame a suitable ESOP Scheme.

2. Compensation Committee Meeting to frame ESOP scheme.

3. Board Meeting to adopt ESOP Scheme and approving notice Convening General Meeting.

4. Intimate the Stock Exchange within 15 minutes of the conclusion of the Board meeting through a letter or Fax – under Clause-22
Despatch 6 copies of the notice of the General meeting to the Stock Exchanges
Remarks
Should be issued to the Stock Exchanges before they are dispatched to the Shareholders of the Company

5. Despatch the notice of the General Meeting of the Company.
Remarks
Atleast 21 days’ clear prior notice should be given

6. Obtain certificate from Statutory Auditors for Compliance of SEBI (Employee Stock Option Scheme), 1999.
Remarks
Where the Company has passed a resolution for approval of ESOP in a general meeting, the Board of Directors of the Company shall place before the shareholders at each Annual General Meeting, a Certificate from the Statutory Auditor of the Company that the Scheme has been implemented in accordance with these guidelines and in accordance with the resolution of the Company in the general meeting.

7. General Meeting to approve ESOP Scheme by passing Special Resolution
Filing of Form 23 with RoC
Remarks
Within one month of passing resolution

8. Filing ESOP Scheme with IT Dept
Remarks
Furnish a copy of the document with the Chief Commissioner of Income Tax having jurisdiction over it, within a period of six months from the date of issue. The document shall contain particulars as specified in clause (2) of Employees’ Stock Option Plan or Scheme under Section 17(2)(iii) of Income Tax Act (as given in SEBI Guidelines for ESOP).

9. Apply for In principle approval from Stock Exchanges for listing of equity shares to be issued pursuant to the ESOP Scheme 2006
Remarks
This approval be obtained once the options are granted
Issuing Letter of Grant by Compensation Committee

10. Intimation to the Stock Exchange at the time of granting of options, with regard to
• No of shares covered under the options
• Terms of the options
• Time frame for exercising of options

11. Exercise of Options by Employees as per ESOP Scheme

12. Intimation to the Stock Exchange in respect of exercising of options and no of shares covered

13. Board Meeting to allot shares upon exercise of options

14. Filing Form 2 with RoC for ESOP 2006 allotment

15. Issue of share certificates / credit in demat account to ESOP 2006 allottees
Remarks
Within time frame of listing agreement

16. Apply for listing of the shares allotted

DISCLOSURE IN ANNUAL REPORTS

The Board of Directors shall, inter alia, disclose either in the Directors report or in the annexure to the Director’s report, the following details of the ESOP:

a) Options granted;
b) The pricing formula;
c) Options vested;
d) Options exercised;
e) The total number of shares arising as a result of exercise of option;
f) Total number of options in force;
g) Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with the relevant Indian Accounting Standards
h) Consideration received against issuance of shares.

1. Disclosures has to be made in the direct report:

In particular the details of employees with respect to Senior Management Employees
Particulars of employee who is getting more than 5% of options
Specify the employees getting more than 1% of issued capital at the time of grant

2. Continual disclosures requirement
The option grantee should receive all documents That are sent to the members of the company This shall include annual accounts as well as notices of meeting and accompanying explanatory statements.

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