ESOP for Founders

New FAQ – for Founders

  • New to ESOP, know all about it here. Don’t forget to see the detailed example and the sample documents at the end of this article. Note that this article is useful for both founders and employees alike to know the basics
  • Are you a founder? Want to know all about how to rollout ESOP formally in tour Startup, use this step-by-step guide.
  • Should I create a trust to rollout ESOP in my Company? – see top questions below
  • What are the top questions you need to answer as a Founder before creating your ESOP scheme document? – done
  • Are you a founder or CFO? We bust all the secrets of ESOP accounting in this article. If you are a US registered Startup, refer to this article which covers US GAAP standards for accounting. – Nitin is doing this
  • Did you know who all are eligible to receive ESOP in India and US? – DONE
  • Related to the above question – did you know that if you grant 1% or more ESOP, you need to have shareholder approval?
    • Approval of shareholders by way of separate resolution in the general meeting shall be obtained by the company in case of grant of an option to identified employees, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant of option.
  • Are employee shares counted under the 200 limit for private companies in India?
    • No, as per Indian laws, the ESOP shareholders don’t count towards the 200 investor limit for private companies on the captable.
  • How are employee departures handled in case of ESOP? – sanjay
  • Related to the above question, many founders in India wonder how to give advisory equity? – sanjay
  • What are the compliance requirements for ESOP apart from the annual accounting covered earlier? – sanjay
  • What is the tax treatment of ESOPs upon grant, upon exercise, upon sale of shares etc? – done
  • What is RSU or RSA? Is this applicable for India or not? – sanjay
  • What is ESOP (Employee Stock Option Plan) vs ESPP (Employee Stock Purchase Plan)?  sanjay
  • How does the secondary sale of ESOP shares happen? – sanjay

ESOP & CAP Table
Management simplified

Get started for free