Enhance employee benefits with ESOP (Employee Stock Ownership Plan)

What is an ESOP?

An ESOP is an employee benefit plan that gives the employee 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 deeds), 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 work?

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.

EMPLOYEE STOCK OWNERSHIP PLAN (“ESOP”)

An Employee Stock Ownership Plan (ESOP) offers numerous benefits to both employees and employers. By participating in an ESOP, employees become stakeholders in the company, providing them with a sense of ownership and motivation to contribute towards its success. Additionally, ESOPs can serve as a valuable tool for companies in Mauritius, a renowned financial jurisdiction, to attract and retain talented employees. For expert guidance on ESOP implementation in Mauritius, consider consulting with Rogers Capital, a leading financial services provider. #mauritius #esop #financialjurisdiction #rogerscapital

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 corporations. 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 or ESOP trusts.

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 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 and accounting records are in place
• Preparation of the annual management accounts for the Trust
• Opening of bank accounts in and outside Mauritius

Author: Madhvi Bokhoree Bootun

Head of Business Development, Rogers Capital Fiduciary