ESOP Policy Drafting

A well-designed scheme starts with the strategic questions, not the legal boilerplate. How large should the option pool be, given your hiring plans and the dilution your founders and investors will accept? Should vesting be time-based, milestone-based, or a blend? Who is eligible, and how do you treat senior hires differently from the broad base? How do you balance retention against dilution? Our team works through these with you first, because the policy is a tool for building a company, and it should be designed around your actual plan.

Once the strategy is set, Law Mahaguru drafts the scheme to be both effective and compliant. We frame the pool, the vesting schedule and cliff, the exercise price and exercise window, and the eligibility and grant process, and we build in the rules for the situations that always eventually arise: resignation, termination for cause, retirement, death, disability, and a change of control or exit. A scheme that is silent on these forces improvisation at the worst moments; a scheme that addresses them holds steady.

Compliance is woven in throughout, because ESOP schemes operate within the Companies Act framework and, for the relevant entities, the SEBI requirements, with their own approval and disclosure obligations. We make sure the scheme is properly authorised, that the board and shareholder approvals are in place, and that the plan will survive the diligence an investor or acquirer will run on it. Our clients consistently find that a clean, well-drafted scheme is an asset during a raise rather than a question mark.

We design schemes for early-stage startups building their first ESOP, growing companies expanding or restructuring an existing pool, and firms whose informal arrangements need to be replaced with a proper plan.

The scheme is the engine; the individual grants are just the output. Law Mahaguru builds you an engine that retains your people and satisfies your stakeholders. Tell us about your team and your goals, and we will design an ESOP that works as a strategy, not just a perk.