ESOP and Employee Welfare Trustee

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Scheme

Under the ESOP Scheme Company grants employees/directors stock options which gives them the benefit or right to purchase or subscribe at future date, the securities offered by the Company at a predetermined price.

Constitution of Compensation Committee

  • The company has to form the Compensation Committee who allot options and administers and supervises the whole scheme.
  • The Compensation Committee is formed by the Board of Directors wherein the majority of whom are independent Directors.
  • ESOP Trust when settled is guided by Compensation Committee.

Brief Role of ITSL as Trustee

1.To obtain PAN for the Trust.
2.To open & operate the Bank Accounts.
3.To open & operate the D-mat Account and operate the Trading Account for dealing in the Equity Shares of the Company.
4.To follow the instruction of the Compensation Committee in regard to the purchase, holding, sale transfer or disposal of the equity shares of the Company and settlement of proceeds.
5.To act as per the directions of the Compensation Committee in matters of exercise of voting rights of equity shares held by Trustees on behalf of employees.
6.To distribute the dividend in respect of Equity Shares of the Company amongst the beneficiaries as determined by the Committee.
7.To confirm receipt of fund transfer by the Company for purchase of shares to the Trust Bank account.
8.To carry out purchase and sale of shares as per grant of options and mandates from option holders and Compensation Committee instructions.
9.To monitor taxation part of the Trust by appointing Chartered Accountant.
10.To make mandatory ongoing declarations while selling / purchasing shares.
Employee Welfare Trustee

The objects of such Trusts maybe all of the following or maybe some selective objects, but which are always for the benefit of all employees or a class of employees. The objectives may be as under.

1.Medical Aid to employees or/and their family
2.Educational Help to employees or/and their children
3.Help to purchase residential house
4.For giving prize to an employee who has done extraordinary job for Company
5.For arranging Trips, Seminars or training for employees
6.For extending retirement gifts to employees etc.
Funds –

Companies either donate the funds to such Trusts or Companies give interest-free or with interest Loan to the Trust.

Investment –

Normally, the investment of Trust Funds is done as per the advice of the contact person from Company side, who in turn takes advice from his investment department. The investment is in Fixed Deposit of Banks, Shares (including shares of the Company who is a settler of the Trust), Debentures, Mutual Funds, etc.

Role of ITSL as Trustee

  • To prepare or vet Trust Deed
  • Obtain related KYC
  • Obtain PAN/TAN
  • Open/Operate/Close Bank Account
  • Make/change/redeem Investments
  • Maintaining Books of Accounts, getting them audited and approved
  • Filing Income Tax Return and Monitor Taxation of the Trust
  • Arrange meetings of Trustees
  • Maintain minutes of meetings
  • Pass benefits to beneficiaries as per Trust Deed
Trustee appointment–

In some cases, ITSL is the sole Trustee. In some other cases, ITSL is one of the Trustees along with other trustees and Settlor Company appoints their Trustees – who may be from within the Company or professionals or experienced persons who are not related to Company.

Presently, ITSL is managing Employees Welfare Trusts of many reputed Indian companies.

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