ESOP Policy (Employee Stock Option)
Detailed ESOP Policy template for Indian unlisted companies, aligned with Section 62(1)(b) of the Companies Act, 2013 and Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014, covering grant, vesting, exercise and termination consequences.
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What is a ESOP Policy (Employee Stock Option)?
A comprehensive ESOP Policy template for Indian unlisted companies that documents scheme objectives, eligibility, pool size, vesting, exercise, termination treatment and shareholder rights, aligned with Section 62(1)(b) and Rule 12 requirements.
When should you use this?
Common situations where this document is the right choice.
What's included
Key sections and clauses in this document.
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Frequently asked questions
Everything you need to know before creating your document.
Is this ESOP Policy compliant with the Companies Act, 2013 and Rule 12?+
The template is structured around Section 62(1)(b) of the Companies Act, 2013 and Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014 and reflects common market practices for unlisted companies. Company-specific legal review is still recommended.
Can promoters or 10%+ shareholders participate in this ESOP?+
Rule 12 generally restricts ESOP grants to promoters and 10%+ shareholders in unlisted companies, subject to specific startup exemptions. The eligibility description field should reflect whether such persons are excluded or covered by an applicable exemption.
How should we design the vesting schedule and cliff period?+
Most Indian ESOPs use a 3–4 year vesting schedule with a 1-year cliff and periodic vesting thereafter, ensuring at least one year between grant and first vesting. The template lets you describe any compliant schedule and toggle a cliff period.
Does this Policy guarantee liquidity to employees?+
No. Liquidity is inherently dependent on future events such as buybacks, secondary sales or exits. The template includes configurable language for intended liquidity mechanisms but clarifies that no assurance is provided unless explicitly committed by the company.
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ESOP Policy (Employee Stock Option)