The issuance of shares through an ESOP should be authorised under the Articles of Organization (AOA). If this specific clause is missing from the AOA, an extraordinary general meeting must be held before the procedure to change the AOA and add this clause can be started.

Step 1: Drafting a reference to the Companies Act of 2013 as the first stage in the procedure used to create an ESOP.

Step 2: The proposed resolution must then be presented to all of the directors and shareholders during a board meeting.

Step 3: The ESOP scheme should be approved by all of the company’s shareholders and directors for further resolution..

Step 4: To approve the special resolution for issuing the ESOP, the general meeting should consider the price of the shares to be issued as well as the designated time and date.

Step 5: The ROC must receive an MGT-14 before the board resolution can be adopted. Within 15 days of the meeting’s end, the draught minutes should be distributed to all of the directors.

Step 6: The general meeting should pass the special resolution for issuing the shares under the ESOP plan to the company’s employees, directors, and offices. The MGT-14 form must be submitted to the RoC within 30 days after passing the special resolution, starting on the day the resolution was passed.

Step 7: Form SH-6, in which all the details of the ESOP must be filed and the employees must be issued stock options, must be used to build and maintain the register of employee stock options.