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    FDI calculation for the issuance of Employee Stock Options

    Posted By : Juhee Goyal / Published on : 10-Jan-2023 04:49 AM / View : 400 / Comment : 1

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    Hi Everyone!

    Whether the percentage of foreign investment should be calculated at the time of issuance of Employee Stock Options (ESOP) or vesting stage or exercising stage?
    Read more on : options stock employee issuance calculation

    • As per the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, the calculation of foreign investment in an Indian company with ESOPs will depend on the stage at which the foreign employees exercise the options.

      If the foreign employee exercises the ESOPs and acquires shares in the Indian company, then the foreign investment will be calculated based on the percentage of foreign equity held after the issuance of shares.

      On the other hand, if the foreign employee sells the shares acquired through ESOPs, the calculation of foreign investment will be based on the percentage of foreign equity held at the time of exercising the ESOPs.

      It is important for companies to monitor their foreign investment levels, and seek necessary approvals if they exceed the prescribed thresholds.

      It is worth noting that if the foreign investment in the company exceeds the sectoral cap, then the company would be required to obtain prior approval from the Foreign Investment Promotion Board (FIPB) or the Reserve Bank of India (RBI), as applicable.

       
      31-03-2023 / 11:24:54 AM
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