What is the difference between ESOS and ESOP?

1. Eligibility of an employee to participate in Employee Stock Option Scheme (ESOS)

‘Employee Stock Option’ (ESOP) has been defined under Section 2(37) of the Companies Act, 2013, according to which “employees’ stock option” means the option given to the directors, officers or employees of a company or its holding company or subsidiary company or companies, if any, which gives such directors, officers or employees, the benefit or right to purchase, or to subscribe for, the shares of the company at a future date at a predetermined price.

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As per Section 62(1)(b) of the Companies Act, 2013:Following persons can participate:

  • a permanent employee of the company who has been working in India or outside India; or
  • a director of the company, whether a whole-time director or not but excluding an independent director; or
  • an employee as defined in the points mentioned above of a subsidiary, in India or outside India, or of a holding company of the company.

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Following persons cannot participate:

  • An employee who is a promoter or a person belonging to the promoter group; or
  • A director who either himself or through his relative or through any body corporate, directly or indirectly, holds more than ten per cent of the outstanding equity shares of the company.

Hence, it is not correct to say that “Every employee of the company is eligible to participate in Employee Stock Option Scheme” (ESOS)

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2. What is the difference between ESOP vs ESOS?

PointsEmployees Stock Option SchemeEmployee Stock Purchase Scheme
Meaning“Employee stock option scheme or ESOS” means a scheme under which a company grants employee stock options directly or through a trust.“Employee stock purchase scheme or ESPS” means a scheme under which a company offers shares to employees, as part of a public issue or otherwise, or through a trust where the trust may undertake secondary acquisition for the purposes of the scheme.
Purchase of SharesUnder ESOS, employees are given an option to purchase shares at a later date, i.e. after the vesting period.Under ESOPs, employees are given an option to purchase shares on the spot at a discounted price.
Lock-inThe company may specify the lock-in period for the shares issued pursuant to the exercise of the option.Shares issued under an ESPS shall be locked in for a minimum period of one year from the date of allotment.
Public IssueESOS has to be approved separately by the company in general meetings by passing a special resolution. It cannot be part of a public issue.Shares under ESPS can be issued as a part of a public issue.
Vesting PeriodThe minimum vesting period for ESOS is one year.No vesting periods for ESPS as shares are offered on the spot.

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*P2P investment is subject to risks. And investment decisions taken by a lender on the basis of this information are at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower.


LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping lenders diversify their investments beyond traditional investment instruments ever since.

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The Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Innofin Solutions Private Limited, and does not provide any assurance for repayment of the loans lent through its platform.

LenDenClub is an Intermediary under the provisions of the Information Technology Act, 2000 and virtually connects lenders and borrowers through its electronic platform via the website and/or mobile app.

The lending transaction is purely between lenders and borrowers at their own discretion, and LenDenClub does not assure loan fulfilment and/or lending simple interest. Also, the information provided on the platform is verified or checked on the best efforts basis without guaranteeing any accuracy of the data/information verification. Any lending decision taken by a lender on the basis of this information is at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower, fully or partially. The risk is entirely on the lender. LenDenClub will not be responsible for the full or partial loss of the principal and/or interest of lenders’ lending amounts.

*This is an annualized yield and is subject to the maximum FMPP tenure, which is 5 years. P2P lending is subject to high risk and may cause an entire loss of principal.
 

*P2P lending is subject to risks. And lending decisions taken by a lender on the basis of this information are at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower.

** Average value mentioned is the weighted average of simple interest received by lenders

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