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Resolution for issue of shares through Employee Stock Option Plan (ESOP)


  • By : abiZa Team
  • May 20, 2019

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED BY THE MEMBERS OF [] AT EXTRA ORDINARY GENRERAL MEETING HELD ON [day, date ] AT [time] AT THE REGISTERED OFFICE OF THE COMPANY AT [address]

Approval of ESOP Scheme 20__

"RESOLVED THAT pursuant to the provisions of section 62[1][b] and all other applicable provisions of the Companies Act, 2013 and the Rules made thereunder [including any statutory modification[s] or re-enactment[s] thereof for the time being in force], the Articles of Association of the Company, as amended from time to time and subject to such other approvals, permissions and sanctions as may be necessary and such conditions and modifications as may be imposed or prescribed while granting such approvals, permissions and sanctions, which may be accepted by the Board of Directors of the Company [hereinafter referred to as the "Board", approval and consent of the Members of the Company be and are hereby accorded to the Employee Stock Option Plan 20__ [hereinafter referred to as the "_________"/ "Plan"] and to authorize the Board to create, offer and grant from time to time the number Employee Stock Options ["ESOPs"] being not exceeding __% [Five percent] of the paid-up equity share capital of the Company as on the date of passing the resolution to the permanent employees and Directors of the Company [except independent Directors], whether whole time or otherwise, whether working in India or outside India, as may be decided by the Board under the Plan [hereinafter referred to as an "eligible employees"] including the employees of subsidiary Company, convertible into equivalent number of equity shares of  INR__/- [Rupees ___] each, on such terms and conditions, as may be determined by the Board under ESOP 20__.

RESOLVED FURTHER THAT the Board be and is hereby further authorised to issue and allot equity shares upon exercise of ESOPs from time to time in accordance with the Plan and such equity shares shall rank pari passu in all respects with the then existing equity shares of the Company.

RESOLVED FURTHER THAT the number of ESOPs that may be granted to any eligible employee, in any financial year and in aggregate under the Plan shall be less than 1% [One percent] of the issued equity share capital [excluding outstanding warrants and conversions] of the Company and the same shall be offered to employees of subsidiary Company [ies] whether in India or elsewhere.

RESOLVED FURTHER THAT the aforesaid ceiling ESOPs convertible into equivalent number of equity shares of ___/- [Rupees ___] each shall be appropriately adjusted, in case of any corporate action[s] such as rights issues, bonus issues, sub-division, split or consolidation of shares, any change in capital structure, merger and/or sale of division/undertaking or any other re-organisation /restructuring of the Company, without affecting any other rights or obligations of the option grantees.

RESOLVED FURTHER THAT Board be and is hereby empowered:

  1. to administer, implement and supervise the ESOP Scheme 20__ either directly by itself;
  2. to formulate, approve, evolve, modify, change, vary, alter, amend, suspend or terminate the PGL ESOP 2017 and determine and bring into effect such terms and conditions and procedures for grantor vesting of Share[s]/Option[s] under ESOP Scheme 20__ either directly by itself or through ECC;
  3. to grant, issue, re-issue, recall, surrender, cancel and withdraw stock options from time to time and to determine the terms and conditions therefore;
  4. to delegate all or any of the powers herein conferred by this resolution to any Committee of Directors, Director, Officer or Authorised Representative of the Company;
  5. to do all such acts, deeds, things and matters as may be considered necessary or expedient and settle any questions, difficulties or doubts that may arise in this regard without requiring the Board to secure any further consent or approval of the Members of the Company."

 

Approval of Allocation and Grant of Stock Options to Employees

RESOLVED THAT pursuant to the provisions of the Companies Act, 2013 and the Rules made thereunder as amended from time to time or any other law for the time being in force [including any statutory modification or amendment thereto or enactment thereof for the time being in force] and in accordance with the Articles of Association of the Company, and subject to such other approvals, permissions and sanctions as may be necessary from time to time, consent of the members of the Company be and is hereby accorded to grant the stock options under the ‘Employee Stock Option Plan 20__’ also called as ‘ESOP 20__’ and/or ‘_____ 20__ Plan’ [hereinafter referred to as “____ 20__”] to the present and future employees, from time to time on such terms and conditions as contained in the ______ 20__ and summarized in the Explanatory Statement annexed hereto.

RESOLVED FURTHER THAT any Director of the Company be and is hereby authorized to update, maintain and preserve ‘The Register of Employee Stock Options’ in the prescribed format pursuant to Section 62[1][b] of the Companies Act, 2013 and rule 12[10] of The Companies [Share Capital and Debentures] Rules, 2014.

RESOLVED FURTHER THAT any Director or Authorized Representative of the Company be and are hereby authorized to do all such acts, deeds, and things, as may be deemed necessary for giving effect to the above stated resolutions.”

Certified True Copy

For _______________________

__________

Director

DIN: ________

Address: ____________

 

EXPLANATORY STATEMENT UNDER SECTION 102 OF THE COMPANIES ACT, 2013

Item No. 1 and 2

Approval of ESOP Scheme 20__ and

Approval of Allocation and Grant of Stock Options to Employees

Equity based compensation is considered to be an integral part of employee compensation across sectors which enables alignment of personal goals of the employees with organizational objectives by participating in the ownership of the Company through share based compensation scheme/plan. In order to attract, reward and retain the talented and key Employees in the competitive environment and encourage them to align individual performance with Company objectives, the Company intends to implement ‘Employee Stock Option Plan 20__’ also called as ‘ ESOP 20__’ and/or ‘_____ 20__ Plan’ [hereinafter referred to as “_____ 20__”].

 

The main features of the _____ 20__ are as under:

1) Brief description of the Scheme/Plan:

This proposed Scheme called the ‘_______Employee Stock Option Plan 20__’ also called as ‘_____ ESOP 20__’ and/or ‘_____20__ Plan’ [hereinafter referred to as “_____ 20__”] is intended to reward the Eligible Employees of the Company for their performance and to motivate them to contribute to the growth and profitability of the Company. Your Company also intends to use this Plan to retain talent in the organization as it views options as instruments that would enable the Employees to share the value they create for the Company and align individual objectives of employees with objectives of the Company in the years to come.

2) Total number of Options to be granted:

Such number of options would be available for grant to the eligible employees of the Company under ______ 20__, in one or more tranches not exceeding 10% of the issued and paid up capital of the Company.

Vested options lapsed due to non-exercise and/or unvested options that get cancelled due to resignation/termination of the employees or otherwise, would be available for being re-granted at a future date. The Board is authorized to re-grant such lapsed/cancelled options subject to the provisions of _____ 20__ and the Articles of Association of the Company, within the overall ceiling.

3) Identification of classes of employees entitled to participate in _____ 20__:

Following classes of employees are entitled to participate in _______ 20__:

a) a permanent employee of the Company who has been working in India or out of India; or

b) a director of the Company, whether a whole time director or not but excluding an Independent Director; or

c) an employee as defined in clauses [a] or [b] above, of a subsidiary company, in India or outside India, or of a holding company of the Company

but does not include-

a) an employee who is a promoter or a person belonging to the promoter group; or

b) a director who either himself or through his relative or through any body corporate, directly or indirectly, holds more than ten percent of the outstanding equity shares of the company.

3) Requirements of vesting and period of vesting:

The minimum Vesting Period shall be one [1] year from Date of Grant of Option. No Eligible Employee shall be granted Options exceeding one per cent [1%] of the issued share capital of the Company unless authorized by the shareholders of the Company by a special resolution.

Upon the termination of the Employee's employment for any reason or resignation, no further Options, subject to the Vesting Schedule, will vest after the effective date of the expiration or termination.

Stock options granted pursuant to the _______ 20__ shall vest within 4 [four] years from the date on which such stock options are granted [“Grant Date”] in the following manner: [i] 25% [Twenty Five per cent] shall vest on the first anniversary of the Grant Date; and [ii] the remaining 75% [Seventy Five per cent] shall vest in equal half yearly installments over a period of 3 [Three] years commencing from the first anniversary of the Grant Date [“Vesting Period”].

4) Exercise price:

Exercise Price shall mean the per Share exercise price for the Shares to be issued upon Exercise of an Option and shall be the face value of such shares and shall be specified in the grant letter.

5) Exercise period and the process of Exercise:

Exercise Period shall mean a time period after Vesting within which the Option Grantee may Exercise his right to apply for Equity Shares against the Employee Stock Options Vested in him in pursuance of the Option Plan as specified in the _______ 20__.

An Option shall be deemed to be exercised when the Company receives [i] written or electronic notice of Exercise from the person entitled to Exercise the Option, and [ii] full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator [as defined in the _______ 20__] and permitted under the Plan. Shares issued upon Exercise of an Option shall be issued in the name of the Optionee. Until the Shares are issued [as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company], no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the Exercise of the Option. The Company shall issue [or cause to be issued] such Shares promptly after the Option is exercised validly by the Optionee under the Plan.

If a Stock Option expires or becomes un-exercisable without having Vested in full, or is surrendered, those Equity Shares that were subject thereto will become available for future grant or sale under _______ 20__ [unless the _______ 20__ has terminated] or any other Stock Option Plan as may be approved by the shareholders of the Company.

 

6) Appraisal process for determining the eligibility of employees under _______ 20__:

The appraisal process for determining the eligibility shall be decided by the Board from time to time.

7) Maximum number of options to be issued per employee and in aggregate:

The maximum aggregate number of shares that may be subject to the Option and sold under the Plan shall not exceed anytime, 10% of the issued and paid up capital of the Company. Maximum number of Options to be issued per employee shall be as per the provisions of _______ 20__ and the Articles of Association of the Company, within overall ceiling.

8) Maximum quantum of benefits to be provided per employee under the _______ 20__:

The maximum quantum of benefits underlying the options issued to an eligible employee shall be as equal to the difference between the option exercise price and the market price of the shares as on the exercise date.

9) Time period within which the employee shall exercise the vested options in the event of a proposed termination of employment or resignation of employee:

All vested options as on the last date of termination become exercisable during the Exercise Period. In the event, the Option Grantee chooses not to exercise the Vested Options, such Vested Options shall stand cancelled.

10) Conditions under which option vested in employees may lapse:

If an Optionee fails to exercise any Vested Options by the Exercise Period, the right to exercise shall lapse without any liability or claims on the Company or its successor. Other conditions under which option vested in employees may lapse shall be as contained in the _______ 20__.

11) Implementation or administration of Scheme:

The _______ 20__ shall be administered by the Board or Committee or authorized personnel as appointed by the Board of the Company in accordance with Applicable Laws and the Charter Documents of the Company.

12) Source of Shares:

The source of shares shall be as contained in the _______ 20__.

13) Accounting and Disclosure Policies:

The Company shall follow and comply with the relevant Accounting Standards as may be prescribed by the Institute of Chartered Accountants of India from time to time, including the disclosure requirements prescribed therein.

14) Method of option valuation:

The Company shall adopt the fair value method or any other method as per applicable Accounting Standards prescribed by the Institute of Chartered Accountants of India or prescribed under any other statutory provisions from time to time for valuation of options.

Consent of the Board to the aforesaid resolutions is already received and Consent of the members is being sought by way of Special Resolution pursuant to Section 62[1][b] and all other applicable provisions, if any, of the Companies Act, 2013 and rules made thereunder.

A draft copy of the _______ 20__ is available for inspection at the Company’s Registered Office on all working days during business hours between 11:00 a.m. [IST] to 01:00 p.m. [IST] up to the date of Annual General Meeting.

The Directors and Key Managerial Personnel of the Company may be deemed to be concerned or interested in these Resolutions only to the extent of any Stock Options that may be granted to them and the resultant equity shares issued, as applicable.

For ________________

___________

Director

DIN: ________

Address: ____________

Date:

Place: