TOPIC:- STUDY ESOP’S IN INDIAN CONTEXT &

RELATE TO PROFITABILITY..

A Proposal made by: - NAME :- SHUBHAM

ROLL NO.:- 1764
B.A LL.B {Hons.}

A Proposal submitted to:- Dr. MANOJ MISHRA

A research proposal submitted in partial fulfilment for the course

titled (ECONOMICS-I) for attaining the degree B.A LL.B {Hons.}.

August,2018

CHANAKYA NATIONAL LAW UNIVERSITY

NYAYA NAGAR, MITHAPUR
PATNA-800001

1
 INTRODUCTION

ESOP stands for Employee Stock Ownership Plan. ESOPs, like other employee benefit plans,
offer advantages to business owners, companies, and employees alike.

An ESOP is a retirement plan designed to provide employees with an ownership interest in

the company by investing primarily in stock of the employer. ESOPs are unlike other
retirement plans, which typically diversify their holdings by investing in a variety of assets.
The ESOP is funded with tax-deductible contributions by the employer, which can be in the
form of company stock, or in cash which is used to purchase company stock. An ESOP
operates through a trust, under the direction of a trustee or other named fiduciary.

ESOPs must be specifically designated as an ESOP in the plan document, and must comply
with special ESOP requirements of the Internal Revenue Service (IRS).

An ESOP is a qualified, de ned contribution employee bene t plan that invests primarily in
the stock of the employer company. ESOPs are “qualified” (i.e., tax-qualified) in that in
return for meeting certain rules designed to protect the interests of plan participants, ESOP
sponsors receive various tax benefits. ESOPs are “de ned contribution plans.” e employer
makes yearly discretionary contributions that accumulate to produce a bene t that is not de
ned in advance. In contrast, under de ned bene t plans (like traditional pension plans),
employees are guaranteed a specified benefit funded by the company through required
contributions.

Technically, an ESOP is simply a variation of a stock bonus plan or combination stock

bonus/money purchase pension plan that is designed to in- vest primarily in employer stock.
(Under a stock bonus plan, the employer pays out an employee bene t in the form of company
stock. Money purchase pension plans are retirement-oriented plans that commit the company
to a minimum annual contribution.) An ESOP is the only type of qualified employee bene t
plan that can also borrow money from or on the credit of the employer, provided the ESOP
uses the money to buy employer stock.

OBJECTIVE OF THE STUDY

The researcher intends to find out the introduction of ESOP’s in the Indian Market and what
is its impact in the Indian context.

2
 HYPOTHESIS

1. To know the concept of ESOP used by companies as a scheme.

2. To know that how it serves two fold purpose for both employee and the
company.
3. To investigate how the employee becomes a shareholder in the company
through ESOP.

RESEARCH METHODOLOGY

The researcher has adopted a purely doctrinal method of data collection.

SOURCES OF DATA

1. BOOKS
2. INTERNET
3. JOURNALS

LIMITATION

The present research is confined to a time limit of one month. The researcher has used
purposive and convenient method of data collection due to paucity of time and various
limitations of Research which includes Money, area, language etc.

TENTATIVE CHAPTERISATION

1. What is an ESOP?
2. A brief history on ESOP.
3. How to establish an ESOP?
4. How do ESOP’s work?
5. Use of ESOPs
6. Types of ESOPs
7. ESOP Legal provisions
8. Taxation of ESOP
9. Conclusion

3
4