When an employee leaves the company, he is eligible to receive the vested portion of esops granted. The rest is fortified to the company. To prevent constant employee turnover, a vesting schedule is created by all organisations granting esops.
In case an employee faces a shortfall of funds to exercise his ESOPs, he can avail finance facility from SK BNPP. Product is aimed at financing the Exercise Price + Perquisite tax. Through ESOP financing employees can hold equity in the company and benefit from appreciation in the value of their shares.
ESOPs help employees to grow their wealth
An ESOP refers to an employment benefit plan that offers ownership interest in the organisation to select employees in the form of shares/stocks. Our esop financing facility enables you to exercise the options that are vested in your favour by your employer. This facility not only eliminates the hassle of arranging funds in order to purchase esops but also gives the freedom to exercise when the price is in your favour.
Financing is done for both exercise price + perquisite tax, to the extent of apre-defined percentage on the current market price
Our facility enables you to grow your wealth as you can hold equity in the company for a longer term and thus benefit from the appreciation in the value of stocks
No EMI's to be paid.
Interest is calculated on the amount utilized and for the period it has been utilized for
Interest needs to be repaid either at the end of the tenure OR at the time of pre-closure OR at the time of sale of securities, whichever is earlier
No pre-payment charges, no lock-in period
Online access to ledger and dashboard
Dedicated Relationship Manager
| Parameters | Norms |
|---|---|
| We lend to |
|
| Age criteria | Individual should be atleast 18 years old |
| Tenure | Minimum 30 days - maximum of 400 days.Renewal on mutual consent post 400 days |
| Amounts considered for funding | Exercise amount + perquisite tax amount |
| Loan to value (LTV) |
|
| Interest calculation | Interest shall be calculated on daily basis and debited on the last day of the month |
| Interest repayment due date | End of tenure OR at the time of pre-closure OR at the time of sale of options, whichever is earlier |
| Interest reset clause | 30 days |
| Margin Shortfall (refer FAQs for detailed meaning) | To be regularized within 7 working days either by repaying the shortfall amount OR pledging securities of 2x value OR by squaring off the securities to the extent of the shortfall amount |
| Rate of Interest | Between 8% to 15% per annum |
| Processing fees | Between 0.50% to 1% of the sanction amount + taxes |
| Penal interest charges | 2% |
| Foreclosure/Prepayment Charges | Nil |
| Renewal Charges | Nil |
The principal can be repaid in one shot at the end of the tenure of loan i.e. 1 yr
Interest is calculated on a daily basis at a simple rate on the outstanding principal amount; you can choose to pay the outstanding interest either at the end of the loan tenure or at the closure of loan, whichever is earlier.
In case of pre-payment of a loan, the outstanding interest would be adjusted first from the pre-payment amount and the balance would be adjusted towards the principal.
Client will be required to repay the principal and the interest (due) at the time of selling of shares or at the end of the tenure or loan closure, whichever is earlier.
No equated monthly installment will be required to be paid on a monthly basis
Loan Account for funding
Demat Account with Sharekhan Ltd., only for the purpose of esop allotment and pledging
Aadhar card or PAN card and a photo
6 months Bank statements
Employee ID card
Demat holding statement or client master list
One cancelled cheque and copy of it with client attestation
Two security cheques AND one cheque of Rs 300 in favour of Sharekhan BNP Paribas Financial Services Ltd for demat account opening
ESOP allotment letter AND Copy of ESOP application done by the client
Details of respective company's esop (beneficiary) account where money needs to be transferred
2 pledge forms signed by the client (the form should be of the dp mentioned in the clients esop application to the company)
When an employee leaves the company, he is eligible to receive the vested portion of esops granted. The rest is fortified to the company. To prevent constant employee turnover, a vesting schedule is created by all organisations granting esops.
ESOPs offer serious tax and investment benefits. Since ESOPs are tax-exempt trusts, profits earned by the company stay with the employees. If an organisation is 100% employee-owned, it doesn't have to pay taxes, which makes it more profitable.
ESOPs can provide significant gains in the long run, but they are also taxed twice. 1. At the option exercise stage by the way of perquisite tax, 2. when you sell the shares by the way of taxes on capital gains. Percentage of perquisite tax would depend on the total amount of esops that the employee wishes to exercise. Taxes on capital gains are derived from the period for which the stocks are held by you. If you sell stocks within 1 year of purchase of esops, short term capital gain tax will be levied and if the sale of stocks is done post 1 year of purchase, long term capital gain taxes will be applicable
Since ESOPs are nothing but stocks/shares of the company held by its employees and its like owning stcoks/shares of any company, the owner receives cash dividends.
When there is a dip in the market price of the stock pledged for availing esops,leading to a dip in the margin below 50% is known as the situation of margin shortfall. The borrower needs to regualrise this shortfall either paying the lender in cash OR by pledging 2X free stocks held by the borrower OR by selling of 2X securities i.e. pledged with the borrower.