Listed co. - alternatives for issuing shares to employees

Others 806 views 3 replies

Clueless

Consultant

49 Points Posted on 19 May 2012

The promoter (principal / majority shareholder) of a private company that has now gone public (via reverse takeover) wishes to issue percentage stake to the early employees (of the pvt. co.). There is no paperwork available that recognises their stake before the co. got listed.

Can the promoter / listed co. issue shares to these individuals now? Or, is there any other way (e.g. via subsidiary / jv) that this can be achieved?

Thanks in advance for your help / guidance.

Replies (3)

vaibhav

CA & CS

577 Points Posted on 20 May 2012

Hi dear, Definatly it can be done by way of Esop. Conduct BM and the policy finalise to issue esop to old employess and passed the resolution in eogm .

Clueless

Consultant

49 Points Posted on 21 May 2012

Thanks for your help, Vaibhav.

However, in this case these specific employees were part of the private company's early team (more like working partners) and they need to be given 3-4 percent stake each.

If I am correct, ESOP may not be the best solution to this problem as there would be implications related to grant price, shareholder approval and vesting period, as the the company is now listed via reverse takeover.

Ideally, these individuals should have been given sweat equity while the company was private and that should have been converted to shares of the public company at the time of reverse takeover / listing. But this has not happened. Now, the promoter wants to issue shares to them but is not sure of the right approach.

What is the best way out in this situation - would it be possible to form a subsidiary or create a JV and issue shares to these members in the new co.?

Thank you for the help.

Clueless

Consultant

49 Points Posted on 22 May 2012

Can someone share their valuable knowledge regarding the best option in this situation? We would like to reach a solution as quickly as possible. I am grateful for your help.