Overview
ESOP valuation determines the fair market value of the company's shares at grant, exercise and for tax and accounting. It affects employee perquisite taxation and the expense you book in the accounts.
Key points
- Fair market value is needed at exercise for perquisite tax calculation
- Grant-date fair value is needed for accounting expense
- Valuation supports setting a sensible exercise price
- Plan design and compliance with Companies Act rules matter alongside valuation
- Regular refresh is needed as the business grows
Typical documents required
- ESOP plan document and grant details
- Latest financial statements
- Cap table
- Recent funding round details
How we work
Review of the ESOP scheme
Valuation of shares and option fair value
Report preparation
Support for tax and accounting teams
Frequently asked questions
Why does ESOP valuation matter for employees?
Tax on exercise depends on the fair market value on the exercise date, so the valuation directly affects employees.
How often should we revalue?
Whenever there is a material event such as a funding round, and at regular intervals as required for tax and accounting.
This page gives general information and is not legal or tax advice. Requirements change, so confirm current rules for your situation with us before acting.