ESOP Services from Algo Legal

An employee stock option plan (ESOP) is a type of employee benefit plan that offers employees a chance to obtain an ownership stake in their company. At Algo Legal, our professionals help start-ups, high-growth companies, and entrepreneurs craft effective, compliant stock option plans.

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Importance of ESOP

Under an ESOP, an employee is granted the right to acquire shares of the company at a future date, subject to the terms and conditions of an option plan and applicable regulations. By giving employees a sense of ownership and aligning interests, companies with well-crafted ESOPs are more productive, more profitable, and have lower employee turnover rates.

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What We Offer

General

  • Assistance in uploading ESOP-related information on a software or tool
  • Complete ESOP life cycle management through the vesting and exercise stage
  • Prepare pre and post cap tables for the vesting and exercise stages
  • Computation of perquisite taxation for the employees at the time of exercise

Sale of shares

  • Prepare computation of tax liability in case of sale of shares
  • Assist with deposit of appropriate taxes based on the calculation

Secretarial Filings

  • Filing of requisite forms with ROC upon vesting, exercise, and sale of shares
  • Amendment in the articles and memorandum of the company
  • Advisory pertaining to prior consent requirement from the investors for the sale of shares
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What We Offer

ESOP Scheme and Advisory

  • Advising on the type of scheme depending on the mandate from the company
  • Discussions with the founders
  • Drafting a quality ESOP scheme
  • Advisory note on tax, secretarial and legal compliances on the above

    • Secretarial Documents

    • Preparing secretarial documents for implementation and adoption of a scheme


      • Filings with Authorities

      • Filing of requisite forms with ROC
      • Amendment in the articles and memorandum of the company
      • Advisory pertaining to prior consent requirement from the investors

      Cap table tracking

      • Preparing the pre and post ESOP cap table
      • Real-time tracking of cap table on the ESOP software upon:
        • Each exercise of options by the employee
        • Transfer of shares by employees to other investors

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Additional Services

Algo Legal provides comprehensive legal services to venture capital firms, private equity firms, and early-stage businesses, including, but not limited to:

Start-up Recognition

We assist start-ups in obtaining their registration certificate from the Department for Promotion of Industry and Internal Trade (DPIIT). Once registered with DPIIT, start-ups are eligible to receive ESOP for up to 10 years from the date of incorporation.

80 IAC Tax Exemption

After obtaining initial start-up recognition, we help start-ups obtain 80-IAC certificates, which provides for tax holiday for 3 consecutive FY out of the first 10 years since incorporation.

Also, capital gain exemption, under section 54GB of the Income-Tax Act, in the transfer of residential house property provided net consideration is utilized for subscription in equity shares of the start-up.

Angel Tax Exemption

The Angel Tax Exemption is another advantage for qualifying start-ups that have obtained initial recognition. Relief is possible for eligible start-up companies paying tax under section 56(2)(viib) of the Income-Tax Act while raising investment from resident investors at a price higher than the fair market value.

Why choose Algo Legal?

We are committed to building lasting partnerships with our clients. Our experienced professionals provide innovative, solution-oriented representation. To get help with an ESOP, start-up recognition, or any related legal matter, please contact us today for a confidential consultation.

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