Mayuri Lal (officer CS) (748 Points)
24 February 2011Dear Members,
There is a listed company and it had passed a resoultion for ESOP in september 2008, so will that resolution be valid if we take the approval in the next AGM or EGM . I think we can not bkoz its a listed company and and we have to act upon teh resoution within 15 days..
correct me if i m rong...
Further the company wants to go for ESOP so can anyone please provide me with teh latest cheklist..
Thanking you in anticipation
Regards,
Mayuri Lal
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 24 February 2011
Procedure for Granting of Shares Under ESOS in Listed Companies
1. Hold board meeting for
a. Approving the ESOS
b. Calling and Approving the notice of AGM/EGM for passing special resolution
c. Constituting the compensation committee
2. In case of listed company advance notice to the Stock Exchange and after the Board Meeting, outcome of the Board Meeting is also to be notified immediately.
3. Send three copies of notice to the Stock Exchange.
4. Make disclosures to the grantees.
5. Hold general meeting and pass required special resolution.
6. Intimation to SE along with the certified copy of special resolution.
7. The company shall appoint a registered merchant banker for the implementation of ESOS as per guidelines till the stage of framing the ESOS and obtaining in principal approval from the stock exchange.
8. File form 23 within 30 days of the special resolution to register the resolution with ROC.
9. Obtain in principal approval from SE.
10. Prepare a list of options exercised by employees.
11. Hold board meeting for allotment of shares.
12. File a return of allotment in form 2 to the ROC within 30 days.
13. Give intimation to NSDL/CDSL regarding corporate actions.
Mayuri Lal
(officer CS)
(748 Points)
Replied 24 February 2011
thank u ...
But sir i had this typical doubt that teh company in september 2008 had already taken a resolution regarding ESOP and no further action was taken on it and now the this compny wants to issue ESOP so that resolution is valid or not???
Mayuri Lal
(officer CS)
(748 Points)
Replied 24 February 2011
This is an abstract of the minute regarding ESOP in the board meeting held on 27.06.2008 wat I m taking about .. can this be continued now?
Employees’ Stock Option Scheme
_________________ briefed the Board about the draft scheme circulated among the members. He informed that as per the approval granted by the shareholders in the last AGM, the Company can issue maximum 2% of present equity i.e., 6,80,902 equity shares of the Company under ESOP scheme subject to the maximum of 10,000 equity shares to any employee. He further informed that a Compensation Committee has to be constituted to decide on the options to be granted to individual employees. The Board deliberated at length on the scheme in light of the objects to be achieved by implementing the scheme, particularly on the following variables.
i. Eligibility criteria i.e. level upto which the option is to be given and the minimum period of service.
ii. Quantum of the options based on the level and period of service, initial vesting period, total vesting period and yearwise vesting ratio.
iii. Pricing of the options and implications of various pricing options.
iv. Exercise period
The broad consensus was that initially the option should be granted upto ‘O’ & ‘E’ grade to all the persons having completed one / two years’ service subject to minimum performance criterias to be decided by the Compensation Committee. It was also decided that the pricing will be based on the fair value method. Other variables were also discussed in detail and were left to be decided by the Compensation Committee in light of the discussions and to present the final scheme in the next Board meeting for approval. For the purpose, the Compensation Committee was constituted consisting of following members:
1. A
2. B
3. C
Jaideep
(Service)
(1368 Points)
Replied 25 February 2011
Hi Mayuri,
Board has approved draft scheme in the aforesaid resolution. Please check what is the last date valid for the scheme. As the scheme is approved by the Board, now ESOP will be governed by scheme itself. If scheme allowed to issue shares even noe then there is no question for validity of resolution.
Regards
Jaideep Pandya
Mayuri Lal
(officer CS)
(748 Points)
Replied 25 February 2011
thanks jaideep..
wat u said is absolutely logical and true...
so for now all i need to do is to ask for the drefted Scheme from the higher official...
and i also checked the AGM resolution it says (inshort ill write it):-
""RESOLVED THAT pursuant to section 81(1A) ............ cionsent of the Company be and is hereby accorded to teh Board to the proposed ESOP Scheme 2007 and to create , offer, issue and allot in one or more trenches under the proposed shceme 2007 at any time ........................................ not exceeding 2%.................................."
RESLOVEd That for the purpose of giving effecr to teh above resoluttion, the Board be and is hereby authorised to do all such acts, deeds, matters and things as may be ....................... at the the time of listing of securitis without requiring the Board to secure any further consent or approval of the members of teh Companty in this regard,."
So i think we can start working on this scheme rite???
Jaideep
(Service)
(1368 Points)
Replied 25 February 2011
Company need to approve the scheme if not approved previously as said by you... for issuing options.
Get the Scheme and go through it... you will understand mechanism.
First approve the schme and authorised Board to to create , offer, issue and allot................ Dont say it PROPOSED SCHEME.
You can Start...
ALL the Best...
Jaideep Pandya
Mayuri Lal
(officer CS)
(748 Points)
Replied 25 February 2011
yes got it thanks a lot .....
So teh conclusion is considering and in continuation of the prvious resolutions pased for the ESOP , the securities can be alloted.
AN sir one more thing, teh draft AGM resolution which i hav written in short it says that the the consent of teh company is cccorded to teh scheme 2007.
so is there any need to approve it again when we are ctual;y goin to allot shares under ESOP???
Jaideep
(Service)
(1368 Points)
Replied 25 February 2011
No...
Once Scheme is approved...no need to take further approval for issuing shares or alloting options...
Board or Compensation committee can invoke their powere as provided by members. I mean Board or comittee can allot the same.
Regards
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 25 February 2011
No problem you can move ahead...
Please check the vesting period also.
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 25 February 2011
Specimen of Special Resolutions for issuance of shares under ESOP Scheme
For issuance of shares under ESOP Scheme
RESOLVED THAT pursuant to the provisions of section 81(1A) and all other applicable provisions, if any, of the Companies Act, 1956 (“the Act”), the provisions contained in the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (“the Guidelines”) (including any statutory amendment, modification or re-enactment to the Act or the Guidelines for the time being be in force) and subject to such approvals, permissions, sanctions and subject to such conditions and modifications as may be prescribed or imposed by the above authorities while granting such approval, permissions and sanctions, approval and consent of the company be and is hereby accorded to the Board of Directors (hereinafter referred to as “the Board” which terms shall be deemed to include any committee include ESOP Compensation Committee of the Board), to the proposed ESOP Scheme 2009 and to create, offer, issue and allot in one or more trenches under the said proposed ESOP Scheme 2009 at any time to or for the benefit of employees and directors of the company such number of equity shares and /or equity linked instruments including options and / or other instrument or securities which could give rise to the issue of equity shares (hereinafter collectively referred to as “securities”) of the Company initially not exceeding 5% of the paid up equity share capital of the company as on 30th October, 2009, at such price and on such terms and conditions as may be fixed or determined by the Board in accordance with the guidelines or other applicable provisions of any law as may be prevailing at that time.
RESOLVED FURTHER THAT the Board be and is hereby authorized to formulate, evolve, decide upon and bring into effect any Scheme (hereinafter referred to as “the ESOP Scheme - 2009”) on such terms and conditions as contained in the relevant explanatory statement to this notice and to make any modification(s), change(s), variation(s), alteration(s) or revision(s) in terms and conditions of the scheme from time to time including but not limited to amendments with respect to vesting period, exercise price, eligibility criteria, vesting schedule or to suspend, withdraw or revive the ESOP Scheme 2009.
RESOLVED FURTHER THAT the said securities may be allotted in accordance with the ESOP Scheme 2007 through an existing trust or a trust which may be set up in any permissible manner and that the ESOP Scheme 2009 may also envisage for providing any financial assistance to the trust to acquire, purchase or subscribe securities of the Company.
RESOLVED FURTHER THAT the new equity shares to be issued and allotted by the company in the manner aforesaid shall rank pari passu in all respects with the then existing equity shares of the Company.
RESOLVED FURTHER THAT the Board be and is hereby authorized to take all necessary steps for listing of the securities allotted under the ESOP Scheme 2009 on the Stock Exchanges where the existing securities of the company are listed as per the provision of the Listing Agreements with the concerned stock exchanges and other
applicable guidelines, rules and regulations.
RESOLVED FURTHER THAT for the purpose of giving effect to the above resolution, the Board be and is hereby authorized to do all such acts, deeds, matters and things as may be necessary or expedient and to settle any questions, difficulties or doubts that may arise in this regard at any stage including at the time of listing of securities without requiring the Board to secure any further consent or approval of the members of the company in this regard.
Explanatory Statement
ESOP Scheme 2009: The Company has always believed in rewarding its employee for their continuous hard work, dedication and support, which has led the company on a growth path. To enable more and more employees to enjoy the fruits of the phenomenal growth that the company has witnessed in the recent past, it is proposed to implement an ESOP Scheme. The main objective of the scheme is to give employees, who are performing well, a certain minimum opportunity to gain from the Company’s performance thereby acting as a retention tool and to attract best talent available in the market. Stock Options have long been recognized internationally, as an effective instrument, to align the interest of employees with those of the company and its shareholders, providing an opportunity to employees to share the growth of the company, and to create long term wealth in the hands of employees. Stock Options create a sense of ownership between the company and its employees, paving the way for a unified approach to the common objective of enhancing overall shareholder value. The Board therefore proposed to evolve an Employee Stock Option Scheme (hereinafter referred to as “the ESOP Scheme- 2009”) for the benefit of permanent Employees and Directors of the Company and such other persons/entities as may be prescribed by SEBI from time to time, and in accordance with the provisions of prevailing regulations. The following explanatory statement sets out the various disclosures as required by clause 6 of the Securities & Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (herein after referred to as “the Guidelines”).
The salient features of the ESOP Scheme are as under:
(A) Total number of options to be granted
(i) The total number of options to be granted under this scheme shall initially not exceed 5% of the total paid up equity share capital of the company as on 30th October, 2009
(ii) The Board may with the approval of the shareholders increase the maximum number of options under the ESOP Scheme 2009 at any time
(iii) One option entitles the holder of the options to apply for one equity share of the company.
(B) Identification of classes of employees entitled to participate in the ESOP
(i) The Employees and Directors, of the Company
(ii) Employees
(a) Who are either promoter or belong to promoter group as defined in the Guidelines: or
(b) Holding 10% of the outstanding share capital of the Company’s equity share capital at any time after the commencement of this Scheme Will not be eligible for grant of options under this Scheme
(C) Requirements of vesting, period of vesting and maximum period of vesting
(i) There shall be a minimum period of one year between the grant of options and vesting of options.
(ii) The vesting period may extend upto 4 years.
(iii) The vesting shall happen in one or more trances as may be decided by the ESOP Compensation Committee.
(D) Exercise price or price formula
The exercise price for the conversion of 1 option into 1 equity share shall be the ‘market price’ within the meaning
set out in the Guidelines, i.e., the latest available closing price prior to the date of meeting of the Board in which
Options are granted/shares are issued on the Stock Exchange where there is highest trading volume on the said
date.
(E) Exercise Period and the Process of Exercise
(i) Exercise period will commence from the vesting date and extend upto the expiry period of the option as decided by the ESOP Compensation Committee. The expiry period may extend upto 7 Years from the date of grant of options. The ESOP Compensation Committee will decide on the Expiry period of options for Employees leaving the Company after grant of options in their favor.
(ii) The Options will be exercisable by the employees by a written application to the designated officer of the company to exercise the Options, in such manner and on execution of such documents as may be prescribed by the ESOP Compensation Committee under the Scheme.
(iii) The Options will lapse if not exercised within the specified exercise period.
(F) Appraisal Process for determining the eligibility of employees to the ESOP Scheme
(i) The company has a formal performance appraisal system established wherein the performance of the employees is assessed each year on the basis of various functional and managerial parameters. The appraisal process is revised at regular intervals.
(ii) Employees and Directors would be granted Stock Options based on performance-linked parameters such as work performance, technical knowledge, period of service, designation and such other parameters as may be decided by the ESOP Compensation Committee from time to time.
(iii) The ESOP Compensation Committee may at its discretion extend the benefits of the ESOP Scheme- 2009 to a new entrant or any existing employee on such other basis as it may deem fit.
(G) Maximum number of options to be issued per employee and in aggregate
(i) The maximum number of options to be granted to each employee will depend upon the rank/designation of the employee as on the date of grant of options. However no employee shall be entitled to more than such number of options as may be determined in any financial year.
(ii) The aggregate number of options to be granted under this scheme shall not exceed initially 5% of the total issued & paid up capital of the Company as on 30th October, 2009,
(iii) The ESOP Committee shall decide on the number of options to be granted to each employee within this limit.
(H) Accounting Methods
The Company shall confirm to the accounting policies specified in Clause 13.1 of the Guidelines, and /or such other guidelines as may be applicable from time to time.
(I) Method of Valuation of these options
The Company shall use the fair value method for valuation of the options Clause 6 of the ESOP guidelines requires that any ESOP Scheme for offering stock options to the employees of the Company must be approved by the shareholders by way of a Special Resolution. Furthermore, as the Scheme will entail further shares to be offered to person other than the existing shareholders of the company, consent of the members is required by way of a Special Resolution pursuant to the provisions Section 81 (1A) of the Companies Act, 1956 Accordingly, the resolution set as item no.___ is being placed for the approval of the shareholders pursuant to the provisions of section 81(1A) of the Companies Act, 1956 and Clause 6 of the ESOP guidelines and all other applicable provisions of the law for the time being in force. The Board of Directors recommends the Special Resolution as set out in item no.___ for the approval of the members.
None of the Directors of the Company is in any way concerned or interested in the resolution except to the extent of the shares that may be offered to him/her under the Scheme.
II. For issuance of equity shares to the employees of the subsidiaries of the Company under the Employees Stock Option Scheme of the Company
RESOLVED THAT pursuant to the provisions of Section 81(1A) and all other applicable provisions, if any, of the Companies Act, 1956 (“the Act”), and in accordance with the provisions of the Memorandum and Articles of Association of the Company, provisions of the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 (“the ESOP Guidelines”) [including any statutory modification(s) or re-enactment of the Act or the ESOP Guidelines for the time being in force], the Listing Agreement entered into with the Stock Exchanges where the securities of the Company are listed or other relevant authority, from time to time, to the extent applicable and subject to such other conditions and modifications as may be prescribed or imposed while granting such approvals, permissions and sanctions, which may be agreed to by the Board of Directors of the Company (hereinafter referred to as “the Board” which term shall be deemed to include any Committee including Remuneration & Compensation Committee which the Board may constitute to exercise its powers, including the powers, conferred by this resolution), the Board is be and hereby authorized to create, offer, issue and allot at any time to or to the benefit of such person(s) who are in permanent employment of the Subsidiary Company(ies), including Directors of the Subsidiary Company(ies), whether working in India or abroad or otherwise, except the Promoter Directors, under the Employee Stock
Option Scheme, 2008 (hereinafter referred to as the “ESOP Scheme, 2008”], such number of equity shares and/or equity linked instruments (including Options/Warrants), and/or Restricted Stock Units (RSU’s) exercisable into equity shares, and/or any other instruments or securities (hereinafter collectively referred to as “Securities”) (subject to the ceiling referred to in resolution 9 above) which shall not exceed five percent of the issued equity shares of the Company as on the date of grant of option(s) convertible into equivalent number of Securities including permanent employees of the Company, at such price, in one or more trenches and on such terms and conditions as may be fixed or determined by the Board/Committee.
RESOLVED FURTHER THAT the said Securities may be granted/allotted directly to such employees/directors of the Company in accordance with the ESOP Scheme, 2008 framed as tabled before the Board or ESOP Scheme, 2008 framed through a trust which may be set up by the Board/Committee of Directors of the Company in any permissible manner.
RESOLVED FURTHER THAT the issue of Securities to any non-resident employee(s), non-resident Director(s) shall be subject to such approvals, permissions or consents as may be necessary from Reserve Bank of India or any other relevant authority in this regard.
RESOLVED FURTHER THAT the new equity shares to be issued and allotted by the Company in the manner aforesaid shall rank pari passu in all respects with the existing equity shares of the Company.
RESOLVED FURTHER THAT the Company shall conform to the accounting policies prescribed from time to time under the ESOP Guidelines.
RESOLVED FURTHER THAT the Board be and is hereby authorized to take necessary steps for listing of the Securities allotted upon exercise under the ESOP Scheme, 2008, on the stock exchanges where the Company’s shares are listed as per the terms and conditions of the listing agreement with the stock exchanges and other applicable guidelines, rules and regulations.
RESOLVED FURTHER THAT for the purpose of giving effect to any creation, offer, issue or allotment or listing of the Securities under the ESOP Scheme, 2008 or through trust, the Board/Committee be and is hereby authorized on behalf of the Company to evolve, decide upon and bring in to effect and make any modifications, changes, variations, alterations or revisions in the said ESOP Scheme, 2008 or to suspend, withdraw or revive the ESOP Scheme, 2008 from time to time as per the discretion of the Board/Committee and to do all such acts, deeds, matters and things as it may in its absolute discretion deem fit or necessary or desirable for such purpose and with power on behalf of the Company to settle any issues, questions, difficulties or doubts that may arise in this regard without requiring the Board/Committee to secure any further consent or approval of the shareholders of the Company.
Explanatory Statement
The Board has identified the need to reward the permanent employees of the Company including employees of the subsidiary companies and to enable them to participate in the growth and financial success of the company. In view of the above, the Board has formulated a Scheme in accordance with the ESOP Guidelines, 1999 to offer securities to the employees (including employees of the subsidiary companies) under the “Employee Stock Option Scheme, 2008” (ESOP Scheme, 2008). The Board has accordingly decided to seek approval of the shareholders of the Company.
Disclosures as per Regulation 6.2 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended:
1. Total no. of Options/Shares/ Securities that could be issued under the Scheme.
Up to five percent (5%) of the aggregate of the number of issued equityshares of the Company, from time to time, on the date(s) of grant of such Securities to eligible employees (or such other adjusted figure for any bonus, stock splits or consolidations or other re-organization of the capital structure of the Company as may be applicable from time to time).
2. Identification of classes of employees entitled to participate in the ESOP
All employees of the Company and Subsidiary Companies, including Directors (including Whole-time Director) of the Company and its subsidiaries and as may be decided by the Remuneration & Compensation Committee constituted for the purpose.
3. Vesting, requirement of Vesting and maximum period of vesting
The vesting period shall commence on the expiry of one year from the date of grant of Securities, and may extend up to 3 years from the date of vesting or such further or other period as the Board/Committee may determine, from time to time. The Securities would vest subject to continued employment with the Company or its subsidiaries. In addition to this, the Board/Committee may specify performance criteria/conditions to be met subject to which securities would vest in the employee. The Securities may vest in trenches subject to the terms and conditions stipulated by the Remuneration & Compensation Committee.
4. Exercise Price or Pricing formula
The Securities would be issued at a market price (Exercise Price), which would be the latest available closing price on the Stock Exchange, which records the highest trading volume in the Company’s equity shares on the date prior to the date of the meeting of the Board/Remuneration & Compensation Committee at which the Securities are granted or at such price as the Board/Remuneration & Compensation Committee may determine.
5. Exercise Period and the Process of Exercise
The exercise period will commence from the date of vesting and will expire not later than 3 years from the date of the vesting of the Securities or such other period as may be decided by the Remuneration & Compensation Committee, from time to time.
6. Appraisal process for determining the eligibility of the employees for ESOP
The appraisal process for determining the eligibility of the employees will be in accordance with the ESOP Scheme, 2008 or as may be determined by the Remuneration & Compensation Committee at its sole discretion.
7. Maximum number of options/shares/securities to be issued per employee and in the aggregate
The maximum number of Securities granted to any employee including Directors of the Company in any one year will not exceed 1% of the issued equity share capital (excluding outstanding warrants and conversions) of the Company.
8. Disclosure and Accounting policies
The Company will comply with the disclosure and accounting policies, as applicable. In case the Company calculates the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used fair value of the options shall be disclosed in the Director’s Report and also the impact of this difference on profits and Earning Per Share (EPS) of the Company shall also be disclosed
in the Director’s Report.
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 07 April 2011
ALWAYS WELCOME...
Hiral
(Dy. Manager )
(28 Points)
Replied 21 April 2011
Dear Members,
One of the company has passed the Board & EGM resolution regarding ESOP in 1999. Whether the same is subsisting till date??
Thanking you in anticipation
Regards,
Hiral
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 21 April 2011
Yes, it may be subsisting as per the terms of scheme....
At the time of allotment just to pass Board Resolution and allot the shares to the employees. And in case of listed companies an intimation is requried to be send to the stock exchange in this regard.
CAclubindia
