Employee Stock Options (ESOP): FAQ Series (I)

  • Article
  • June 3, 2021

Welcome to the FAQ Series on Employee Stock Options (ESOP).


Employee Stock Option (ESOP) is one of the key employee retentions cum motivational tool for Start-ups /early-stage companies. This FAQ Sr. I is prepared to address the various queries from the perspectives of Start-ups / Entrepreneurs / Professional Advisors and Mentors. In Sr. I, we are covering some conceptual queries like

·         Is creating an ESOP Plan necessary for every start-up?

·         At what stage, the Company can consider an Employee Stock Option (ESOP) plan?

·         How much percentage of share capital should be earmarked for ESOP Plan?

·         Whether the shares issued under ESOP would be a fresh allotment of shares?

·         Are there any methods prescribed to allocate the ESOP amongst the employees & who decides the allocation of ESOP? 


This will be followed by more FAQ's in this ESOP Series in the coming days.
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