Employee stock option scheme

EMPLOYEE STOCK OPTION SCHEME

1. employer stock option means any specified securities or  sweat  equity shares , allotted or transferred  by the present or former employer ,to the employee, directly or indirectly, either free of cost or at a concessional price.
2. “specified security” means securities as defined in securities contracts (regulation)act ,1956 and where employees stock option has been granted under any plan or scheme , includes securities offered under such plan /scheme.
3. sweat equity shares means equity shares issued by a company to its employees or  directors ,at a discount or for consideration other than cash for providing know how or making available intellectual property rights, or value addition by whatever name called
4. value of he security or sweat equity shares = FMV of the security/sweat  equity shares as on the date of exercise of  option  less : amount recovered from the employee
5. FMV-Fair market value means the value determined n the prescribed manner (see table below)
6. OPTION means a right but not an obligation granted to an employee , to apply for the specified security or sweat equity shares ,at a pre –determined price.

Determination of FMV of ESOP (rule 40C ) the fair market value shall be determined as under-