Sell ESOPs in India

Please check with your company HR/finance team. It is generally available on ESOP portal of the company. It will have complete information of shares granted, vested and available for exercise.

A Demat account helps investors hold shares and securities in an electronic format. The same can be opened with any Private Banks (HDFC, ICICI, KOTAK…) or with stock brokers (Angelbroking, Zerodha, Grow, HDFC Securities, Motilal Oswal etc, )

Yes, you should have Demat account to exercise your options. In case of no Demat account you won’t be allowed to exercise your options.

No, you will not be allotted any shares if the Demat account does not belong to you.

Options will be available for exercising ONLY when the “Exercise Window” is open from your company.

Opening the exercise window is at company’s discretion. Please check with company HR on when exercise window is going to be open.

Current FMV for tax computation will be given on ESOP portal of your company. Otherwise check with company HR for the FMV.

[(Current FMV - Exercise Price)* Number of options to be Exercised] *31.2% (30% + 4% Edu Cess).

Eg : If you want 10 Options to be exercised with exercise price being Re 1 each and Current FMV per option is 1000 then the calculation of Tax is [(1000 - 1) X 10 ] X 31.2% i.e [9,990] X 31.2% = INR 3,117 (perquisite tax).

For NRIs, India and overseas tax implications to be evaluated separately, based on the specific facts. Further, requisite income tax filings (such as Form 15CB / 15CA) to be undertaken.

Two separate payment transactions are required to be made as mentioned below:

A) Exercise Price

B) Perquisite Tax.

1. Exercise Price Payable : (Number of options * Exercise Price) | (10 X 1) = INR 10

2. Perquisite Tax Payable : INR 3,117

Exercise price fixed at the time of grant will be available on the ESOP portal.

In case your exercise price is higher than FMV, the tax payable of your ESOP will be NIL, however your exercise price payable will be as per below:

Exercise Price Payable : (Number of options * Exercise Price)

Account details will be provided by company HR when you are proceeding to pay the Exercise Price and Perquisite tax amount

No allotments will happen if:

Payment (Exercise Price and Perquisite Tax) not received before window closure.
Payment transferred but details of Transaction not updated on the ESOP Portal.
Payment transferred but Demat account not updated on portal OR updated Demat account does not belong to YOU.
Exercise form not signed and uploaded on Portal.

NOTE : In all the above cases Exercising will be considered as incomplete.

Tax amount collected will get deposited to the Tax Authority against your PAN, the same can be claimed as refund while filing Tax returns Exercise amount will get refunded back to your account.

You have to wait till the next exercise window period, which may fall in next quarter

The decision of Bonus issue is under consideration. In case of any Bonus issue, adjustments will be made with respect to the outstanding options proportionate to the bonus issue during share allotment

Maximum 45 days from the date of closing of the exercise window.

Yes, After the successful realization of payments and fulfilment of all the internal procedures (which may take 45 days) the shares will be directly credited to your Demat account.

In case you ONLY fill the number of options to exercise and do not make the payments, no shares will get allotted.

Yes, you can make an IMPS / NEFT / RTGS directly from your Net banking, however you need to fill the transaction details on the Portal.

Go to Dashboard  Scroll at the bottom to My Summary Report  Click on View Detailed report  Download report in XLS or PDF.

No, as per ESOP Scheme lapsed or cancelled options cannot be reinstated in future.

ESOP Scheme along with other process manual are available to be accessed on ESOP Portal under “Company Docs”.

Yes. Shares needs to be transferred to Planify demat account. Planify woul d assist in liquidating your shares by finding suitable investors.

No. You can share the price at which you want to sell the shares. Planify would also help you in the price discovery. There are no charges which is taken by Planify on the price.

As soon shares gets liquidated, representative from Planify would inform you. Payment gets credited within 24 hours of confirmation.

Any legal heir (not declared as nominee by the employee) intending to transfer ESOP to his/her name should provide below documents:

Death certificate of deceased person.
Succession certificate (to be obtained from the court).

Nominee will be allowed to exercise the options (upon submission of required documents) when the next exercise window gets opened.

Note : The options are subject to lapse if the exercise doesn’t happen within the timeframe mentioned in the scheme.

For any technical assistance feel free to write to procurement@planify.in

ESOP is a plan proposed by the company, where the employees get an option to be a part of the company as its shareholders

ESOP works as an agreement between employer and employees of the company by granting them to exercise their option at a later (future date), which can be cashed or traded.

ESOPs are a good investment if the underlying company has been able to generate good profits as the employee also gets to reap the benefit, just like the shareholder of the company.

The purpose of ESOP is to encourage employees to provide the best of their skills in the company so not only the employer but the employees get to earn with the growth of the company.

There are 4 types of ESOPs. Employee Stock Purchase Plan, Employee Stock Option Scheme, Restricted Stock Units, and Stock Appreciation Rights.

Problems for Employee

ESOPs does not allow voting rights for most of the companies as promoter does. Liquidity risk - An employee invest in the company just like its promoter but if the company goes bankrupt then it will be hard to liquidate ESOP.

Problem for Employer

Giving ESOPs to the employee increase the complexity of the capital structure of the company, which also makes it difficult for the company to raise additional capital in the form of debt or equity as the employers also have an obligation towards the employees.

The ESOP holder in the company gets the chance to exercise its option at market price, which also helps in immediate liquidity once the company gets listed.

Exercising and selling the shares is profitable. It helps avoid the burden of extra income tax to be paid if the options are exercised at later dates over the vesting period.

You can mail at fundraising@planify.in your business plan along with your contact details.

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