Equity Stock Ownership Plans (ESOPs) are a vital tool for incentivizing and retaining talent in Southeast Asia’s competitive startup ecosystem, offering employees equity at favorable terms to align their interests with company success. However, tax regulations for ESOPs vary significantly across the region, with factors such as timing of grants, territorial versus global tax systems, and capital versus employment equity shaping the tax treatment in countries like Singapore, Indonesia, and Thailand. Companies must navigate these complexities carefully, structuring equity plans to optimize employee benefits and minimize tax liabilities while ensuring compliance with diverse regional regulations.

 

Swiggy's IPO, valued at ₹11,300 crore, has unlocked ₹9,000 crore worth of employee stock options (ESOPs), creating significant wealth for around 5,000 employees, with nearly 500 becoming 'crorepatis.' Employees can sell their shares a month after listing, thanks to a regulatory exemption, while the IPO was oversubscribed 3.59 times, driven by institutional investors. With its ESOP program spanning three plans since 2015, Swiggy's founders and top management collectively hold ESOPs worth ₹2,600 crore, emphasizing the company's commitment to rewarding employee contributions.

 

One97 Communications, the parent company of Paytm, has issued 2.44 lakh equity shares to employees under its ESOP schemes, increasing its paid-up capital to Rs 63.73 crore. Paytm’s shares have surged 185% over the past six months, reaching a 52-week high of Rs 967.10, driven by resolved regulatory challenges and progress on key approvals like a payment aggregator license. Additionally, Paytm introduced UPI Lite for seamless small transactions, and UBS Securities raised its price target for the stock to Rs 1,000, reflecting significant improvements in the company’s outlook.

Banyan Gold Corp. has granted 8,000,000 stock options at an exercise price of $0.21 per share to directors, officers, consultants, and staff, with vesting periods up to 18 months and terms of either five or ten years, as part of its annual compensation review. The company’s primary asset, the AurMac Project in Yukon, Canada, boasts an inferred Mineral Resource Estimate of 7 million ounces of gold, accessible via existing infrastructure and featuring two near-surface deposits, Airstrip and Powerline. Banyan also owns the Hyland Gold Project, a sediment-hosted deposit along the Tintina Gold Belt, further strengthening its exploration portfolio in the Yukon Territory.

AnalytixInsight announced the grant of 1.6 million restricted share units (RSUs) and 1.05 million stock options to strengthen its advisory team, including strategic appointments such as John Ballow, Valisha Graves, and Richard Greco. The company aims to enhance its CapitalCube product, expand enterprise sales, and explore new opportunities for its MarketWall fintech solutions, leveraging the advisors' expertise and networks. Additionally, AnalytixInsight plans to settle C$117,500 in accrued fees to directors and officers through the issuance of 11.75 million shares, subject to regulatory approval, as part of its broader strategic initiatives.

Mphasis Limited announced the granting of 25,000 stock options under its ESOP 2016 and 12,000 restricted stock units (RSUs) under its RSU Plan 2021 to eligible employees, effective November 7, 2024, as approved by its ESOP Compensation Committee. The stock options have an exercise price of ₹2,900, with equal vesting over five years and a 60-month exercise period, while the RSUs, priced at ₹10, follow a progressive vesting schedule of 10%, 20%, 30%, and 30% over five years, catering to both Indian and US-based employees. These equity grants are administered through the Mphasis Employees Equity Reward Trust, ensuring compliance with SEBI regulations, and the announcement was officially submitted to the BSE and NSE by Senior Vice President and Company Secretary Subramanian Narayan

Employee stock ownership plans (ESOPs) are increasingly popular in Southeast Asia and India, with 80% of startups now offering them, up from 60% in 2021, as founders recognize their value in attracting talent and managing cash flow. Despite this growth, many founders still lack a deep understanding of ESOPs, underlining the need for better structuring and education to maximize their effectiveness. Meanwhile, funding news includes Easy, an Indian fintech startup, raising $35 million for mortgage technology expansion, and Razer Gold receiving in-principle approval as a major payment institution in Singapore, among other significant industry updates.

In a recent ruling, Denmark’s Eastern High Court determined that stock options granted to an employee were governed by new rules in effect at the time the essential terms, like exercise price and vesting period, were finalized in early 2019. Under these new rules, only vested options could be exercised at termination, with unvested options lapsing, contrasting with the previous rules that allowed employees to retain all options. This case highlights the importance of timing in stock option agreements, as companies must finalize essential terms to determine which regulatory framework will apply to employee stock options.

Enterprise Management Incentive (EMI) schemes provide significant tax benefits for trading companies with gross assets of £30 million or less, allowing them to recruit and retain employees through share options without incurring income tax or national insurance contributions upon grant or exercise. Companies can grant options valued up to £250,000 per individual, with a total limit of £3 million, while ensuring that qualifying employees work at least 25 hours per week or 75% of their time for the company. However, companies must navigate potential pitfalls, such as changes in control or trading activities, and adhere to strict reporting requirements to maintain the favorable tax treatment of EMI options.

Camurus AB announced that 142,300 options from its ESOP 2021/2024 program were exercised in September 2024, generating SEK 37.5 million through the issuance of shares at SEK 263.50 per share. Employees, including the CEO, participated in cashless exercises, selling shares to cover the cost of subscription and taxes. The exercise period for the stock options program will conclude on December 16, 2024.