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Bhavya Sharma
Our Expert Due Dilig... • 9m
Under the Companies Act, 2013, a private company in India can offer the following types of equity to employees: 1. Employee Stock Option Plan (ESOP) - ESOPs are issued under a scheme approved by shareholders through a special resolution. - Employees can exercise their option after a specified vesting period. - The vesting period cannot be less than one year. - ESOPs are a common tool to retain employees and link their interest with the company’s growth. 2. Sweat Equity Shares - Sweat equity is issued at a discount or for consideration other than cash. - Private companies can issue sweat equity up to 15% of the existing paid-up equity share capital in a year or ₹5 crores, whichever is higher. These are the few most important pointers. Rest, it is a detailed topic which can be implemented according to size, stage of the company.
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