ESOP Scheme Setup in Rayagada
CA/CS-managed Employee Stock Option Plan, handled end to end — scheme drafting, the special resolution, and the full grant → vesting → exercise → allotment cycle under the Companies Act, 2013. 100% online, at a fixed fee quoted upfront with zero hidden charges.
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ESOP Scheme Setup in Rayagada
RoC Cuttack — 2nd Floor, Chalachitra Bhawan, OFDC, Buxi Bazaar, Cuttack – 753001
Orissa High Court
21 (Odisha)
Odisha levies Professional Tax (max ₹2,500/year). Applicable to companies employing salaried staff.
Alumina & Ferro-alloys, Tribal Agri, Forest Produce
Rayagada is a southern Odisha alumina, ferro-alloys, and tribal-agri district.
What Is ESOP Scheme Setup?
A quick, plain-language explanation before the details.
An ESOP gives your employees the option — not the obligation — to buy company shares at a fixed price after they complete a vesting period, so they share in the company’s growth.
An Employee Stock Option is governed by Section 62(1)(b) of the Companies Act, 2013, read with Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014. The company offers shares to employees under a scheme approved by its members, and issues the shares on exercise of the options.
Administered through the Ministry of Corporate Affairs (MCA) and the Registrar of Companies (ROC). Listed companies additionally follow the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations.
Once approved, the ESOP scheme continues under its own terms. Each grant carries its own vesting schedule (a minimum of one year between grant and vesting), and options are exercised within the exercise window fixed by the scheme.
Quick Facts
Is This Service Right for You?
Ideal for
- Startups wanting to attract and retain key talent with equity
- Growth-stage companies building an employee stock option pool
- Founders who promised equity and now need a formal scheme
- Companies preparing for a funding round where investors expect an ESOP pool
- Private companies rewarding long-serving employees with ownership
- Businesses aligning employee incentives with long-term company value
You may need this if
- You want to grant employees the option to buy shares at a pre-set price
- You need a legally compliant ESOP scheme document
- Your board and members must approve an ESOP by resolution
- You are ready to define the grant, vesting and exercise terms
- You need to allot shares to employees who exercised their options
- You want to maintain the statutory ESOP register (Form SH-6)
Not sure if you need this?
Talk to an Expert →Why Set Up an ESOP Scheme?
An ESOP is one of the most effective tools to attract, retain and reward talent by giving employees a real stake in the company. Here is why it matters.
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01
Attract & Retain Talent
Equity ownership motivates key employees to stay and build long-term value, especially where cash compensation is limited.
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02
Align Incentives
When employees own a stake, their interests align with the company’s growth and shareholder value.
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03
Investor Expectation
VCs and institutional investors often expect a defined ESOP pool before a funding round — setting it up early keeps you ready.
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04
Legal Compliance
A properly documented scheme under Section 62(1)(b) and Rule 12 keeps grants valid and the cap table clean.
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05
Conserve Cash
Reward employees with equity upside instead of higher salaries, preserving cash for the business.
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06
Founder Control
Options vest over time and convert to shares only on exercise, so ownership is released in a controlled, staged way.
Simple, Transparent Pricing
Custom quote for your case
Fees depend on your business type and scope. Get a clear, itemised quote upfront — no hidden professional charges, government fee billed at actuals.
Who Can Apply?
Eligibility checklist
- A board resolution approving the ESOP scheme and the terms of the plan
- A special resolution of members (an ordinary resolution suffices for private companies under the exemption notification)
- A written ESOP scheme document setting out grant, vesting and exercise terms
- A minimum vesting period of one year between grant of options and vesting
- An identified class of eligible employees, excluding promoters and independent directors (subject to permitted exceptions for startups)
- A statutory register of ESOPs (Form SH-6) to record every grant and option
Everything You Need. One Professional Team.
Consultation
Understand your pool size, eligible employees and objectives, and confirm ESOP is the right route.
Scheme Drafting
Draft a compliant ESOP scheme document with grant, vesting, exercise and lapse terms.
Board Approval
Prepare the board resolution and explanatory statement approving the scheme.
Members’ Resolution
Draft the special (or ordinary, for private companies) resolution and notice for member approval.
Grant Letters
Issue grant letters to eligible employees recording the number of options and exercise price.
Registers & Records
Set up and maintain the ESOP register in Form SH-6 with every grant and vesting event.
Exercise & Allotment
Process option exercise and allot shares, filing Form PAS-3 with the ROC.
Ongoing Support
Guide you on subsequent grants, disclosures in the Board’s Report and cap-table updates.
What You’ll Receive
What Do You Need to Set Up an ESOP Scheme?
Requirements are grouped by company records, scheme design and employee details. Keep clear scans (PDF/JPG) ready — everything is collected securely online.
Company Documents
From the company records- Certificate of Incorporation, MOA & AOA
- Latest shareholding pattern / cap table
- Board & members’ approval details
- Digital Signature Certificate (DSC) of the authorised director
Scheme Details
Prepared with our team- Size of the ESOP pool (number / percentage of shares)
- Proposed exercise price and vesting schedule
- Grant, vesting, exercise and lapse conditions
- Class of eligible employees
Employee Details
For each grantee- List of eligible employees with designation
- Number of options proposed per employee
- Date of joining / employment status
- PAN & email of grantees for grant letters
Special resolution needed
A public company needs a special resolution to approve the scheme. For a private company, an ordinary resolution suffices under the exemption notification dated 5 June 2015.
Minimum one-year vesting
There must be a minimum period of one year between the grant of options and their vesting. The scheme fixes the full vesting schedule beyond that.
Who is not eligible
Options generally cannot be granted to promoters, promoter-group members or independent directors — though recognised startups get relaxations for a limited window.
Register in Form SH-6
The company must maintain a Register of Employee Stock Options in Form SH-6, recording every grant and option granted under the scheme.
Don’t have all the documents?
We’ll identify what your case needs →How an ESOP Scheme Works (Step by Step)
From scheme design to allotment — the full grant → vesting → exercise → allotment cycle under the Companies Act, 2013.
Design the ESOP scheme
Fix the pool size, exercise price, vesting schedule and eligible employees, and draft the scheme document with the board’s explanatory statement.
Pass the resolution
Approve the scheme by a special resolution of members (ordinary resolution for private companies under the exemption notification), with the required disclosures.
Grant of options
Issue grant letters to eligible employees stating the number of options and the exercise price, and record them in the Register (Form SH-6).
Vesting period
Options vest as per the schedule — with a minimum of one year between grant and vesting — subject to continued employment and any performance conditions.
Exercise of options
Within the exercise window, employees exercise vested options by paying the pre-set exercise price to convert them into shares.
Allotment (PAS-3)
On exercise, the company allots shares to the employees and files Form PAS-3 with the ROC, updating the cap table and registers.
How Long Does ESOP Scheme Setup Take?
| Stage | Expected Time |
|---|---|
| Scheme drafting + board approval | 3–7 working days |
| Member resolution + grant letters | Depends on notice / meeting |
| Exercise + allotment (PAS-3 filing) | After vesting & exercise |
Scheme drafting and board approval move quickly. The members’ resolution depends on your notice period and meeting schedule, and grant → vesting → exercise → allotment plays out over the vesting timeline defined in the scheme (a minimum of one year between grant and vesting).
Key Dates — At a Glance
| Frequency | What Is Due |
|---|---|
| At Setup | Board resolution & explanatory statement · Special / ordinary resolution of members · Written ESOP scheme document |
| On Each Grant | Issue grant letters to employees · Record grants in the Register (Form SH-6) · Track the vesting schedule per grantee |
| On Exercise | Collect the exercise price · Allot shares to the employees · File Form PAS-3 with the ROC |
| Annually / Event-Based | ESOP disclosures in the Board’s Report · Cap-table & register updates · SEBI SBEB compliance if the company is listed |
Dates are indicative and may change with government notifications. Our team tracks every deadline so you never miss a filing.
Doing It Yourself vs TaxClue
Doing It Yourself
- Draft a compliant ESOP scheme document yourself
- Decide the pool size, exercise price and vesting terms
- Frame the special / ordinary resolution correctly
- Prepare the board’s explanatory statement and disclosures
- Set up and maintain the ESOP register (Form SH-6)
- File Form PAS-3 for allotment without errors
- Risk an invalid scheme or a defective cap table
With TaxClue
- Expert drafts a scheme aligned to your goals
- Pool size, price and vesting structured correctly
- Resolutions and notices prepared for approval
- Board’s Report disclosures handled for you
- ESOP register (Form SH-6) set up and maintained
- PAS-3 filed correctly on exercise
- Clean cap table and compliant records throughout
Skip the guesswork.
Let an expert handle it →Common Mistakes That Delay Your Application
TaxClue reviews your documents before filing to reduce avoidable errors.
What Compliance Applies to an ESOP Scheme?
At Setup
- Board resolution & explanatory statement
- Special / ordinary resolution of members
- Written ESOP scheme document
On Each Grant
- Issue grant letters to employees
- Record grants in the Register (Form SH-6)
- Track the vesting schedule per grantee
On Exercise
- Collect the exercise price
- Allot shares to the employees
- File Form PAS-3 with the ROC
Annually / Event-Based
- ESOP disclosures in the Board’s Report
- Cap-table & register updates
- SEBI SBEB compliance if the company is listed
Penalties & Consequences
What is at stake if you do not comply
- An ESOP without shareholder approval under Section 62 is invalid
- Setting a vesting period shorter than the mandatory one year
- Granting options to promoters or independent directors outside permitted exceptions
- Failing to maintain the ESOP register in Form SH-6
- Not filing Form PAS-3 on allotment of shares upon exercise
Regulatory Updates 2025–26
- 2025: ESOPs are issued under Section 62(1)(b) with shareholder approval by special resolution; the perquisite is taxed at exercise.
- 2025: Allotment of shares is reported in Form PAS-3 within 30 days on the MCA V3 portal.
Why Businesses Choose TaxClue
CA / CS Team
Qualified Chartered Accountants and Company Secretaries draft and manage your ESOP scheme.
End-to-End
From scheme design to allotment (PAS-3) — fully managed, minimal effort from you.
Fast Turnaround
Committed timelines with proactive status updates at every stage.
100% Online
Everything over WhatsApp / email — no office visits required.
Transparent Fees
A fixed fee quoted upfront — ₹0 hidden professional charges.
Post-Service Support
Guidance continues on subsequent grants, vesting and allotment.
Your Documents Deserve Professional Care
- Documents handled by professionals under confidentiality
- Access limited to the team working on your file
- Communication over secure digital channels
- Documents retained only as long as needed for compliance
Frequently Asked Questions
What is an ESOP?
Which law governs ESOPs in India?
Do I need a special resolution to issue an ESOP?
What is the minimum vesting period for an ESOP?
What are the stages of an ESOP?
Who is eligible to receive ESOPs?
What is Form PAS-3 and when is it filed?
What is Form SH-6?
Can a startup grant ESOPs to promoters?
How is the exercise price decided?
Do listed companies follow different rules?
Can employees be forced to buy the shares?
How is an ESOP taxed in the hands of an employee in India?
When is TDS deducted on ESOPs, and do startups get a deferral?
How is the perquisite value of an ESOP calculated?
What is the difference between an ESOP and sweat equity shares?
How do I set up an ESOP scheme for my startup?
Official Sources & Legal References
Every regulatory detail on this page is drawn from primary law and official government sources. Verify them directly:
- Companies Act, 2013 — Section 62Further issue of share capital, including Section 62(1)(b) on employee stock options · India Code
- Companies (Share Capital & Debentures) Rules, 2014Rule 12 sets out the conditions for an Employee Stock Option scheme
- MCA — Ministry of Corporate AffairsOfficial portal to file PAS-3 and company forms with the ROC
- SEBI (Share Based Employee Benefits) RegulationsAdditional framework applicable to listed companies operating an ESOP
Related Guides
ESOP & Sweat Equity for Startups
Read guide ArticleESOP Taxation Under the ITA 2025
Read guide ArticleESOP Taxation Explained
Read guide ArticleTax on Employee Stock Options
Read guide ArticleIncrease Authorised Capital
Read guide ArticlePost-Incorporation Compliance
Read guide ArticleStamp Duty on Share Documents
Read guideESOP Scheme Setup Resources — All Free
Set Up Your ESOP Scheme the Right Way
Expert-managed ESOP scheme — drafting, the special resolution, grant, vesting, exercise and allotment (PAS-3), end to end under the Companies Act, 2013. Free consultation, fixed fee quoted upfront, zero hidden charges.