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Employee Stock Benefit Advisory

Employee Stock Option Plan refers to a specific scheme wherein a company offers its employees an equity stake or ownership-linked incentives. Employees’ Stock Options have taken shape as a vital tool for attracting new talent, incentivizing and retaining employees, and fetching the maximum output from an employee of the company. Hence, almost every business including startups, listed companies and other mature companies are looking at it as a viable alternative for talent retention.

A company seeking to implement ESOP can select a plan from a broad spectrum of options that precisely fulfills the company’s needs and objectives. The decisions are complex as they involve a function of several diverse things like demography, skill set of the resources, nature of industry, the stage of the business and organization culture. For smooth implementation of the Employee Stock Option Plan, we at AKM Global aim to help the organization in formulation, design, implementation and a plan with the applicable laws and regulations to the company.

At a glance, below are the services we offer for the smooth implementation of the Employee Stock Option Plan:


We provide advice on the suitability of the ESOPs and other alternatives such as Employee Stock Purchase Plans (ESPPs), Stock Appreciation Rights (SAR), and Restricted Stock Units (RSU) to be issued to employees in alignment with the respective laws and regulations.

ESOP Planning And Employee Communication

  • Assistance in structuring ESOP in alignment with the company’s goals and objectives.
  • Preparation of ESOP Policy depicting the guidelines and rules of the scheme.
  • Conducting programs or training sessions to provide employees with a deep understanding of all aspects of ESOP.
  • Assist in keeping track of the ESOP Schedules and monitoring the ESOP allocation.

Accounting of ESOPs

Guidance on the accounting aspects i.e., at the time of grant and accounting for annual expenditure to be recorded in the books in accordance with applicable accounting standards.

Valuation of ESOPs

  • Valuation at the time of grant for assessing the expenditure to be recorded. This valuation will be carried out by a registered valuer, actuary, or SEBI Registered Merchant Banker.
  • Valuation at the time of exercise for the purpose of calculating the value of perquisite in the hands of the employer. This valuation will be carried out by a SEBI Registered Merchant Banker.

Regulatory Requirements

  • Assist in drafting the ESOP Scheme in accordance with the provisions of the Companies Act 2013.>
  • Assist in drafting the resolution by shareholders for the approval of the ESOP Scheme, if applicable.>
  • Preparation of disclosure in the explanatory statement needs to be annexed to the notice for passing the resolution.>
  • Assistance in filing a copy of the resolution with ROC in Form MGT14, if applicable, along with fees.>
  • Helping in maintaining the Register of Employee Stock Options in Form SH-6 recording the particulars of options granted. >
  • Assist in the drafting of board resolution and filing the return of allotment in Form PAS-3 with ROC within 30 days of allotment of shares, once the options are exercised.>
  • Assist in the issuance of certificates on allotment of shares against options exercised.>

Direct Tax Compliance

  • Computation of taxable perquisite.
  • Computation of capital gain in the hands of employees at the time of exit.
  • Assistance in filing TDS Returns and comply with other requirements.
  • Assessing the allowability of ESOP expense in the hands of the company for tax purposes.

Considerations For Cross Border ESOPs

  • Assessing the transfer pricing considerations for corporate tax purposes and assistance in navigating the same for the purpose of reporting and attribution, if any, required in India.
  • Assessing the legality of cross-border ESOPs under the exchange controls in India (i.e. under the Foreign Exchange Management Act, 1999) and assistance in carrying out the applicable compliances in India.