ESOP and Employee Welfare Trustee

Scheme

Under 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 predetermined price.Constitution of Compensation Committee

  • Company has to form Compensation Committee who allot options and administers and supervises the whole scheme.
  • The Compensation Committee is formed by Board of Directors wherein 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 Accouts.
  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 the settlement of the proceeds realised upon such sale, as the case may be.
  5. To act as per the directions of the Compensation Committee in the matters of the exercise of voting rights of the equity shares of the Company held by the Trustees on behalf of the employees.
  6. To distribute the dividend in respect of Equity Shares of the Company amongst the beneficiaries in such manner and to such an extent as may be determined by the Committee.
  7. To confirm the receipt of any fund transfer by the Company for purchase of shares during the week, to theTrust Bank account.
  8. To carry out purchase and sale of shares as per the grant of options and mandates from option holders in accordance with the ESOP Scheme, the necessary particulars will be provided to the Trustees by Compensation Committee, who will then intimate the Share broker by a separate communication regarding the purchase or sale of shares.
  9. To monitor taxation part of the Trust by appointing Chartered Accountant.
  10. To make mandatory ongoing declarations while selling / purchasing of shares.

Employee Welfare Trustee

The objects of such Trusts may be all of the following or may be some selective objects, but which are always for the benefit of all employees or for 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 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 get them approved from the Trustees
  • Filing Income Tax Return and Monitor Taxation of the Trust by appointing separate Tax consultant
  • Arrange meetings of Trustees as per provisions of Trust Deed
  • Maintain minutes of meetings
  • Pass on benefits to beneficiaries as per provisions of Trust Deed and as per the resolutions of theTrust meetings.

Trustee appointment–

In some cases ITSL is sole Trustee. In some other cases ITSL is one of the Trustees alongwith other trustee and Settlor Company appoints their Trustees – who may be from within the Company or may be some professionals or other experienced or reputed persons who are not related to Company.
 
Presently, ITSL is managing Employees Welfare Trusts of many reputed Indian companies.