Swiggy Gets Approval to Assign Third-Party Rights on ESOPs
Category: Civil Law
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INTRODUCTION
Swiggy which is an Indian online food ordering and delivery company, based in Bangaluru, introduced ESOPs on April 2024, and it got listed in IPO on November 2024, ESOPs stands for Employee Stock Ownership Plan, which is a benefit plan that allows employees to own a portion or all of the company they work for. It grants company’s stock to employees. Bangalore Civil Court grants the rights to assign third party rights on ESOPs, which earlier they had restrained on the complaint filed by a formal executive.
ESOPs are legally governed under Section 62 of Companies Act, and relevant regulations of SEBI (Security and Exchange Board of India). The company can claim tax deduction towards employee related to ESOPs under Section 37 of Income Tax Act, 1961.
BACKGROUND
On 7TH November Swiggy’s former assistant vice president named Arun Cyril challenged his unlawful termination and annulment of ESOPs, at that time Bangalore Civil Court temporarily put an injunction on Swiggy regarding the third-party rights on ESOPs, and court restrained Swiggy from transferring rights of the employee to third party.
But in the recent order Bangalore Civil Court allowed food delivery giant and they got green signal to assign third party rights on ESOPs.
The Company’s total ESOP pool is 9000 crore and per share price is 390 Rupees. And after listing in the IPO 5000 employees of Swiggy got benefited by this and 500 employees are crorepati after the listing.
KEY ASPECTS
ESOPs was introduced to boost employees engagement and increase productivity and it contribute to business longevity.
ESOPs also gives an opportunity for the employees to own a stake in the company and offers an ownership interest in the organisation.
After the court order 5000 employees will be benefited by this.
Swiggy also served an exemption from the SEBI on the mandatory one year lock in period that means employee can sell a share a month after the IPO.
It is governed under Company’s Act, SEBI, and Income Tax Act, 1961.
CONCLUSION
Swiggy got permission to assign third party rights on ESOPs, and Bangalore civil court removed the injunction and stay order and allowed the company to go ahead with this. The Company’s total ESOP pool is 9000 crore and per share price is 390 Rupees. And after listing in the IPO 5000 employees of Swiggy got benefited by this and 500 employees are crorepati after the listing.This came after an ex-employee challenged it in the court, during initial hearing the company was asked to put a stay but later got a green signal from the court in Bangalore.
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WRITTEN BY: ADV ANIK
