ESOPs in Startups: Optimal Timing for Founders to Create ESOP Pool

ESOPs in Startups: Optimal Timing for Founders to Create ESOP Pool

Introduction In the ever-evolving landscape of startup funding, there’s a growing trend where angel and seed-stage investors or venture capitalists encourage founders to establish Employee Stock Option Plans (ESOPs) before investing in them. This shift in investor demand has given rise to a common challenge for the founders to agree to create ESOP pools during […]

ESOPs for Indian Startups: A Preferred Tool for Hiring and Retaining Talent

ESOPs for Indian Startups: A Preferred Tool for Hiring and Retaining Talent

Employee Stock Option Plans (ESOP), is a widely adopted methodology used by modern startups, notably established in Silicon Valley by companies like Google and Facebook during their initial stages. The success of this strategy has been mirrored in the Indian market by companies like Flipkart, Citrus Pay, and many other startups. When these startups made […]

Shareholders Allowed Capital Loss Despite NIL Consideration in Company’s Share Reduction

The Mumbai Tribunal in the case of Tata Sons Limited (TSL) held that reduction of share capital of the company by way of cancellation of shares amounts to extinguishment of the right on the shares. It amounts to ‘transfer’ within the meaning and scope of Section 2(47) of the Income-tax Act, 1961 (the Act) for […]

ESOPs Beyond Boundaries: A Guide on Tax Implications of ESOPs at MNCs

Employee Stock Option Plans (ESOPs) have proven to be effective in retaining a talented workforce, preserving cash flows, increasing productivity and achieving enhanced profitability globally. Cross-border ESOP structures may be explored by various global businesses already established in India, as well as by investors intending to establish a greenfield presence or acquire operating businesses in […]

ESOP – Great Succession Strategy for Family-Owned Business

Employee Stock Ownership Plan (ESOP) provides an opportunity for employees to become part owners of stock in the company they work for, at a discounted price. By embracing ESOPs, Family-owned businesses (FOBs) can foster a thriving work environment where employees truly feel invested in the company’s achievements. This often encourages employees to be a part […]

Stock Options: A Wealth Creation Tool – Art of Balancing

ESOPs are a simple and effective method for fostering employee engagement in the company. ESOPs have proven to be a valuable tool in the startup ecosystem, motivating top talent and promoting employee retention. The statistics further validate this trend, with data from Inc42 Plus indicating that in 2022, Indian startup employees reaped over $196.5 million […]

Buyback of ESOP – A Strategic Call

Employee stock option plan (ESOP) are liquid assets for listed companies as employees can see their value or wealth created. In the case of Startups or unlisted companies, ESOPs cannot be sold in an open market. To mitigate this problem, many startups have started buying back the ESOPs issued to their employees, thereby providing them […]

Decoding the Tax Implication of ESOP – Employee’s Perspective

ESOP Taxation Employee stock option plan (ESOP) are granted to eligible employees, who may exercise such options to acquire equity shares of the company in the future and at a predetermined exercise price. Such shares may be acquired subject to the conditions being met as per the plan. ESOPs will form part of the taxable […]

ESOP Tax Implications from Employer’s Perspective

ESOP Taxation ESOP Taxation is the most significant factor in determining the creation of wealth through ESOPs. When it comes to ESOP taxes, there are 2 instances when taxes are paid that is (i) At the time of exercise of ESOP and (ii) At the time of sale of ESOP’s. Let us understand the implication […]

Demystifying Basics of Employee Stock Option Plans

Employee stock option plans (ESOP) should help in building a skilled workforce, essential for company success in the modern world. Employee stock options have gained significant popularity in India thanks to the thriving ESOP startup culture, making them increasingly advantageous. What is ESOP? An Employee Stock Option Plan (ESOP) is a method of rewarding key […]

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