Companies Act, 2013 — Section 62(1)(b)
Governs issuance of shares under employee stock option plans — requires shareholder approval by special resolution.
Retain your best talent.Align incentives with ownership.
A comprehensive ESOP Policy Document covering option pool, vesting schedules, exercise price, leaver provisions, and exit event acceleration — investor-ready and Companies Act compliant.
Option PoolVesting ScheduleLeaver ProvisionsExit Acceleration
Rs 9,999
Fixed Price
Companies Act
Section 62(1)(b)
Investor-Ready
Pre-Round Standard
What we handle for you
An ESOP scheme document that is legally compliant, investor-ready, and designed to retain and incentivise your best people.
ESOP Scheme Document
Draft the ESOP scheme document covering pool size, eligibility criteria, grant process, and administration — compliant with Companies Act Section 62(1)(b).
Vesting & Exercise Design
Design vesting schedules — typically 4-year vesting with 1-year cliff — and define exercise price methodology: fair market value, nominal value, or discounted.
Leaver Provisions
Draft good leaver vs. bad leaver treatment of unvested options — the clause that prevents departed employees from retaining unearned equity.
Exit Event Acceleration
Include acceleration triggers for exit events — IPO, acquisition, or change of control — ensuring employees benefit appropriately from a company exit.
The 4-Step ESOP Process
From option pool design to board approval and individual grant letters — a complete ESOP implementation.
01
Share Company & Pool Details
Provide the total ESOP pool size, current cap table, employee grades eligible, vesting preferences, and exercise price methodology.
02
Lawyer Drafts the Policy
Our corporate lawyer drafts a comprehensive ESOP Policy compliant with Companies Act requirements and aligned with investor expectations.
03
Board Approval Process
We guide you through the board and shareholder approval process required to formally adopt the ESOP scheme.
04
Grant Letter Template
Receive individual ESOP Grant Letter templates for issuing to each employee upon grant.
Legal Framework
ESOPs in India are governed by company law, tax law, and SEBI regulations — requiring formal shareholder approval and careful tax planning.
Companies (Share Capital and Debentures) Rules, 2014
Prescribes the requirements for ESOP schemes — disclosures, conditions, and restrictions.
Income Tax Act, 1961 — Section 17(2)(vi)
ESOPs are taxed as perquisites at the time of exercise, and as capital gains at the time of sale — a critical consideration in ESOP design.
SEBI (Share Based Employee Benefits) Regulations, 2021
Applicable to listed companies implementing ESOP schemes.
Client Success Stories
“We made ad-hoc equity promises to early employees without a formal scheme. LegalKonnect designed our ESOP policy from scratch — pool size, vesting, leaver provisions, and the board resolution. Our Series A investor was very satisfied.”
AB
Abhijit Banerjee
Mumbai“The lawyer explained the tax implications of ESOPs in plain language and helped us choose an exercise price that was fair to employees while managing the tax impact. The grant letters were professional and complete.”
DK
Divya Krishnan
BengaluruFrequently Asked Questions
Stamp Duty Not Included
Government stamp duty charges apply to registered documents and vary by state. These are paid directly to the government and are not part of our service fee. Your advocate will confirm the applicable amount for your state before any document is executed.
ESOPs are taxed at two points: first, as a perquisite (under salary income) when the employee exercises the options and receives shares, and second, as capital gains when the employee sells those shares. The perquisite value is the difference between the fair market value and the exercise price on the date of exercise.
A vesting cliff is the minimum period an employee must remain with the company before any options vest. Typically, a 1-year cliff means no options vest in the first year, and then 25% vest at the end of year one, with the remainder vesting monthly or quarterly over the next 3 years.
This is governed by the leaver provisions in the ESOP policy. Unvested options typically lapse on resignation. Vested but unexercised options may be exercisable within a short window (30–90 days) after the last working day, after which they also lapse.
Under the Companies Act, ESOPs can only be granted to employees and directors. For advisors and consultants, sweat equity shares or a separate advisory option plan (governed differently) is more appropriate.