Question

Explain the following term/concept.

Employee Stock Purchase Scheme (ESPS)

Answer 1

Under the Employee Stock Purchase Scheme (ESPS), the company offers equity shares to its employees at a discounted price which they can buy at a future date. The company deducts a certain amount from the salary of the employee towards the payment for the shares.

Answer 2

Under this scheme, the company offers Equity shares to its employees at a discounted price, which they can buy at a future date. The company deducts a certain amount from the salary of the employee towards the payment for the shares.

The company must fulfil the following provisions:

1. Different numbers of shares can be offered to different categories of employees. 
2. Shares issued through ESPS should be immediately listed. 
3. ESPS shares will have a minimum of a one-year lock-in period from the date of allotment if ESPS is not a part of a public issue. 
4. The company has to fulfil the provisions of SEBI (Share-Based Employee Benefits) Regulations, 2014. 
5. The company has to get the approval of the shareholders through a special Resolution to offer ESPS.