June 2024 ESOP Update: Nykaa, Yes Bank Allocations; CBIC Tax Clarity

Welcome back to the latest edition of Fables of ESOPs for June 2024. After seeing a major slump in ESOP allocation and liquidity programs in May, June witnessed some fresh allocations, even though a full recovery is not close to being seen.  

However, in a notable event, CBIC issues new guidelines clarifying the taxability of ESOPs granted by foreign companies.  

Let’s learn more in detail about how June 2024 fared in the ESOP world.

Alkyl Amines Chemicals allots 9,637 new Equity Shares  

Alkyl Amines Chemical, specializing in aliphatic amines, amine derivatives, and other specialty chemicals, has recently allotted 9,637 new equity shares under its ESOP Plan.  

The shares are issues at the face value of Rs. 2/- each and it has brought the company’s outstanding share capital to Rs.10,22,62,064.  

IIFL Securities allotted 3,69,500 new stock options under its ESOP 2018 scheme

IIFL Securities issued 3,69,500 options, each priced at Rs. 189.45 under its ESOP 2018 Plan. These options vest over a four-year period from the grant date, gradually rewarding employees for their ongoing service and contributions to the company.  

Furthermore, employees have up to seven years from the grant date to exercise these options, offering ample time to benefit from this incentive.

Cosmetics Retailer Nykaa Allocates 4.73 lakh Shares Under Employee Stock Option Plan

FSN E-Commerce Ventures, the company behind the beauty and fashion retail brand Nykaa, has allocated 4,73,138 equity shares under its Employee Stock Option Plan (ESOP). The newly allocated shares are worth approximately Rs 8.08 crore, considering the stock's closing price of Rs 170.95 on the BSE.  

For the quarter ending March 2024, Nykaa reported a 187% increase in its consolidated net profit, reaching Rs 6.9 crore compared to Rs 2.4 crore in the same period the previous year, something which plays a major factor in the company’s sincere efforts toward employee engagement.  

KFin Technologies allots 15,380 new equity shares

KFin Technologies, a leading financial service provider in India has allotted 15,380 equity shares under ESOP at a face value of Rs. 10/-each. This brings the company’s total outstanding share capital to Rs. 171,31,99,510.  

Yes Bank Allots 31.38 Lakh Equity Shares Through Employee Stock Ownership Program

Yes Bank has allotted 31,38,137 equity shares under ESOP at a face value of Rs. 2/-each. This brings the company’s total outstanding share capital to Rs. 62,67,13,23,424/  

Poonawala Fincorp allots 2230000 new shares under ESOP

Under Tranche-04 and Tranche-05 of the ESOP-2024 Scheme-II, 2,000,000 and 230,000 stock options respectively were granted to eligible employees. The exercise prices for these options are Rs. 471.55 and Rs. 438.53, respectively.

San Francisco-Based Tech Firm AiDash Introduces First ESOP Buyback Initiative

AiDash, a San Fransisco based SaaS startup with more than 300 employees in India has announced its 1st ever ESOP Buyback programme. The plan applies to full-time employees who have been with the company for over three years, enabling them to convert their vested shares into cash and benefit from the value accumulated over time.  

The buyback plan follows the recent closing of the company’s $58.5 million Series C funding round, which brought the total amount raised to $91.5 million. This indicates the company’s willingness to acknowledge employees’ key role in the growth of the company and make them a part of success.  

CBIC Clarifies Tax Treatment of ESOPs Granted by Foreign Companies to Indian Subsidiaries

The Central Board of Indirect Taxes and Customs (CBIC) clarified, after the GST Council meeting on June 22, that ESOPs issued by foreign companies to employees of their Indian subsidiaries at current market value will not be subject to GST.  

However, if the foreign parent company charges the Indian subsidiary an additional amount beyond the cost of the securities or shares for ESOPs, then GST will apply.

Conclusion

Notably in this month introduction of AiDash's first ESOP buyback program highlights the growing recognition of employee contributions in the tech sector. Additionally, the CBIC's new guidelines on the taxability of ESOPs granted by foreign companies provide much-needed clarity, ensuring that employees of Indian subsidiaries can benefit without the burden of GST.

With the new government’s budget coming soon, there’s much to several specific sector allotments which will highly influence the ESOP scenarios in the industries. Stay tuned with us to keep you abreast of all things ESOP.