WHAT IS AN ESOP?
An ESOP is an employee benefit plan that gives the employees an ownership stake in the Company. Generally, an ESOP grants company stock to employees, often based on the duration of their employment.
ESOPs are designed so that employees’ motivations and interests are aligned with those of the company’s shareholders. From a management perspective, ESOPs have certain tax advantages, along with incentivizing employees to focus on company performance.
Criteria to be considered when forming an ESOP:
- The percentage of company equity for the ESOP pool
- Plan rules (or deed) including the process for employees who leave and what happens in the event of a business sale
- Eligibility criteria for the selected employees
- Exercise price
How does an ESOP works:
The company setsup an ESOP trust. Into the trust, the company can either put newly issued shares, contribute cash to buy shares of stock from existing owner(s) at no more than the fair market value (“FMV”), or if the owner does not want to sell shares, the company can issue new shares.
Benefits of an ESOP Trust
- Higher employee engagement
- Tax benefits to both employer and employees
- A way for employer to raise capital for expansion or acquisition plans
- Privacy and asset protection
- ESOP, if structured through a Trust in Mauritius, is independently managed by a qualified Trustee
- Up to 4 trustees may be appointed, hence a proper board of trustees may be created to well manage the ESOP
How can we help?
With 3 decades of experience in Financial Services in Mauritius coupled with a team of seasoned & dynamic professionals, Rogers Capital Fiduciary can provide complete trust administration services for a broad range of individuals and corporates. We ensure the smooth running of your trust be it discretionary, accumulation and maintenance trusts, life interest trusts, pension’s trusts, purpose trusts, charitable trusts and ESOP Trust.
Rogers Capital Fiduciary, through its subsidiary, Rogers Capital Trustees Services Limited can provide the following services relating to the formation of an ESOP Trust:
- Advice on the formation of the Trust
- Assist in designing the plan that best suits your needs and which is tax efficient
- Assistance in drafting trust deed and rules
- Maintain a register of employees on whose behalf shares are held
- Payments of benefits to employees as planned
- Work closely with Share Plan Administrator
- Filing of Tax returns where applicable with the Mauritius Revenue Authority
- Ensuring Trust accounts/ accounting records are in place
- Preparation of the annual management accounts for the Trust
- Opening of bank accounts in and outside Mauritius