ESOP Trust Route to create Internal Market Place for Unlisted Companies

An unlisted company in the field of international infrastructure consulting had been implementing an ESOP Plan since years under our guidance.

It was decided to commit a specific % of total shares for ESOPs going forward – a kind of permanent ESOP Pool with the facility that any employee may liquidate the ESOPs anytime after vesting. This led to introduction of a Trust structure with Company funding with a feature of cycling or re-cycling of the ESOP shares to & from employees.

It required a meticulous transaction structure planning keeping in view the administrative conveniences and compliances particularly from the ESOP rules, Companies Act, Disclosure & valuation perspectives, and the Income-tax Act perspectives.

The facility mimicked a limited Internal Market Place giving the needy anytime liquidity.