Tango Trading Ltd. is a public company which has its equity shares listed on NSE. The Company wants to implement Employee Stock Option Plan (ESOP) for its employees. ESOP Plan will be operated through a trust in accordan

CS Executive · Securities Laws and Capital Markets · PYQS · December 2020
Tango Trading Ltd. is a public company which has its equity shares listed on NSE. The Company wants to implement Employee Stock Option Plan (ESOP) for its employees. ESOP Plan will be operated through a trust in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014. The company is willing to issue shares under ESOP scheme to one of its whole time director, Irfan. Irfan holds 12% of the outstanding equity shares of the company. In view of the above facts, answer the following questions : (ii) Prepare a brief note on the process of implementation of ESOP scheme through Trust route.

Answer & Explanation:

The process of implementation of ESOPs scheme through Trust Route is as under: The company creates an Employee Welfare Trust specifically for the purpose of running the ESOP schemes. Company grants loan to the trust for subscribing its shares Company issues fresh shares to the trust and option to employees. Where the employees decide to exercise the option to acquire the shares, trust transfers the shares in the name of the employees Trust repays the loan to the company from the proceeds on sale of shares to employee.

Topics: Employee Benefits

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