Consider the following statements regarding Employee Stock Option Plans (ESOP) in India: 1. It is a benefit scheme where companies offer employees the right to buy shares at an unspecified price after a specific period. 2. Under an ESOP, employees are under the obligation to purchase company shares. 3. Employees may exercise their ESOPs and become shareholders at any time, regardless of whether the vesting period has elapsed. How many of the above statements are correct? |ForumIAS

Q. Consider the following statements regarding Employee Stock Option Plans (ESOP) in India:
1.It is a benefit scheme where companies offer employees the right to buy shares at an unspecified price after a specific period.
2.Under an ESOP, employees are under the obligation to purchase company shares.
3.Employees may exercise their ESOPs and become shareholders at any time, regardless of whether the vesting period has elapsed.
How many of the above statements are correct?

[A] Only one

[B] Only two

[C] All three

[D] None

Answer: D

Notes:

Explanation: All are incorrect

Statement 1 is incorrect: An Employee Stock Option Plan (ESOP) is a benefit scheme where companies offer employees the right to buy shares at a predetermined price after a specific period.

Statement 2 is incorrect: Under an ESOP, employees are granted the right, but not the obligation, to purchase company shares at a predetermined price after completing a specified vesting period.

Statement 3 is incorrect: The employees can exercise their options only after the vesting period, not before.

Source: SEBI

Post-Mains Strategy Session by Mr. Ayush Sinha | ForumIAS