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Employee Stock Purchase Agreement

Employee Stock Purchase Agreement Template for India

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Key Requirements PROMPT example:

Employee Stock Purchase Agreement

"I need an Employee Stock Purchase Agreement for our Series B funded tech startup in Bangalore, offering employees the ability to purchase shares at a 15% discount with a 2-year lock-in period, to be implemented from March 2025."

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Document background
The Employee Stock Purchase Agreement (ESPA) is a crucial document used by companies in India to establish and implement employee share ownership programs. This agreement is typically utilized when companies want to offer their employees the opportunity to become shareholders through systematic share purchases, usually at a discounted price. The document must comply with Indian regulatory requirements, including the Companies Act 2013, SEBI regulations (particularly the SEBI Share Based Employee Benefits Regulations, 2014), and relevant tax laws. It outlines the complete framework for share purchases, including eligibility criteria, purchase periods, price determination methods, payment mechanisms through payroll deductions, and associated rights and obligations. The ESPA is particularly important for companies looking to enhance employee retention, align employee interests with company growth, and create a sense of ownership among their workforce while ensuring regulatory compliance.
Suggested Sections

1. Parties: Identification of the company and the eligible employee

2. Background: Context of the ESPP, company details, and purpose of the agreement

3. Definitions: Definitions of key terms used throughout the agreement

4. Eligibility and Participation: Criteria for employee participation and enrollment process

5. Plan Administration: Details about the administration of the ESPP and responsible parties

6. Stock Purchase Terms: Terms of purchase, including price, payment method, and frequency

7. Purchase Limitations: Limitations on number of shares that can be purchased

8. Payment and Payroll Deductions: Process for payment and handling of payroll deductions

9. Share Issuance and Rights: Process of share issuance and associated shareholder rights

10. Taxation: Tax implications and responsibilities of both parties

11. Compliance with Laws: Regulatory compliance requirements and representations

12. Termination Provisions: Consequences of employment termination or withdrawal from the plan

13. General Provisions: Standard clauses including notices, amendments, governing law, etc.

Optional Sections

1. Foreign Investment Compliance: Required when the ESPP involves foreign parent companies or cross-border elements

2. Lock-in Period: Required when shares are subject to a mandatory holding period

3. Vesting Schedule: Required when the shares are subject to vesting conditions

4. Share Transfer Restrictions: Required for unlisted companies or when there are specific transfer limitations

5. Tag-Along Rights: Required when minority shareholder protections are needed

6. Multiple Share Classes: Required when the company has different classes of shares

7. Insider Trading Policy: Required for listed companies

8. Currency Conversion: Required when payments involve foreign currency

Suggested Schedules

1. Schedule 1 - Plan Details: Detailed terms of the ESPP including offering periods, purchase price formula

2. Schedule 2 - Enrollment Form: Standard form for employee enrollment in the ESPP

3. Schedule 3 - Withdrawal Form: Standard form for withdrawal from the ESPP

4. Schedule 4 - Tax Illustrations: Examples of tax calculations and implications

5. Schedule 5 - Regulatory Compliance Checklist: List of compliance requirements and confirmations

6. Appendix A - Board Resolution: Copy of board resolution approving the ESPP

7. Appendix B - Shareholder Resolution: Copy of shareholder resolution approving the ESPP if required

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Relevant Industries

Technology

Manufacturing

Financial Services

Healthcare

Retail

Telecommunications

Professional Services

Energy

Real Estate

Consumer Goods

Education

Media and Entertainment

Pharmaceuticals

Information Technology

Consulting

Relevant Teams

Legal

Human Resources

Finance

Compliance

Payroll

Corporate Secretarial

Treasury

Risk Management

Corporate Communications

Internal Audit

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Human Resources Officer

Company Secretary

Legal Counsel

HR Director

Compensation and Benefits Manager

Finance Manager

Compliance Officer

Employee Relations Manager

Treasury Manager

Stock Plan Administrator

Payroll Manager

Corporate Communications Manager

Risk Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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