Recently, Bank Rakyat Indonesia has just officially run the ESA program stages 3 and 4.
ESA or
With the ownership of these shares, BRI employees will benefit from both capital gains and dividends obtained from BRI shares.
In recent years, employee stock ownership programs have been quite popular, especially among pioneering or startup companies.
Apart from being a form of appreciation for employee loyalty, employee share ownership is considered to motivate employee morale to build the company and increase their
From the company’s side, ESOP can also be used as an investment field due to its long-term nature.
Because it is considered to be beneficial not only for employees but also companies, this employee stock ownership plan program is quite intensively carried out by many companies.
Then, how exactly are the rules and ways for employees to get share ownership of the company?
To answer this question, Contract Law will provide an explanation below.
What is ESOP?
Employee Stock Ownership Plans (ESOP) are programs that offer employees the opportunity to own shares or options that entitle them to acquire shares either directly or indirectly.
So in ESOP, employees are allowed to own shares from the company where they work within a predetermined time for free or sold at a value below the share price.
The provisions regarding ESOP itself are actually not specifically regulated in Indonesian legislation.
However, it is mentioned in Law No. 40 Year 2007 on Limited Liability Companies.
Article 43 paragraph 3 of the Company Law states that the offering of shares issued for capital increase must first be offered to each shareholder, but this provision does not apply to the issuance of shares intended for employees of the company.
Furthermore, in the explanation of Article 43 paragraph 3, it is stated that what is meant by “shares intended for the Company’s employees”, among others, are shares issued in the framework of the company’s ESOP
Indirectly, this provision has given a legal position to employees who obtain shares through ESOP so that employees also have the same status as shareholders in accordance with the rights and obligations owned by shareholders in general.
In practice, companies and employees will usually make an employee share ownership agreement in order to run the ESOP.
Even in the employee share ownership agreement, there is no reference that regulates the agreement must contain certain clauses.
This is because the agreement adheres to the principle of freedom of contract where everyone is allowed to make an agreement containing any provisions as long as it is done in good faith and does not conflict with the law.
However, for share ownership agreements, at least the agreement must contain:
- Identity of the parties.
- The term of the ESOP, including provisions regarding early termination or extension.
- The rights and obligations that employees and the company must have and fulfill during the term of the ESOP.
- Nominal value of shares (if any), offering price of shares, exercise price of options and basis of determination.
- The number of shares or options carrying the right to acquire shares offered, together with the number of shares that will be issued if all options are exercised, including the option exercise ratio.
- The time and manner of payment for the deposit of shares or the exercise of options that carry the right to acquire issued shares.
- If the financing is carried out by the company implementing the ESOP or other parties, it must be stated which party is carrying out the financing, the amount and period of financing, and the obligations of employees in the context of the financing (if any).
- Restrictions or prohibitions on the transfer of shares or options containing rights to acquire shares issued in the framework of the ESOP, as well as legal consequences if such restrictions or prohibitions are violated (if any).
- Matters that may lead to the loss of an employee’s right to be part of the ESOP.
- Taxation specs in ESOP and non-tax fees and deductions (if any) for employees.
The agreement for ESOP must be made and prepared as well as possible when the company will run the ESOP program.
This is because the agreement is one of the main and important parts when running an ESOP.
Mistakes made when drafting an ESOP agreement can not only have a financial impact but can also have legal consequences for the company.
Read also: KH Services – Contracts and Agreements
KH Contact
If Sobat KH is currently planning to implement an ESOP program in Sobat KH’s company or wants to make an Employee Stock Ownership Agreement but is afraid of making mistakes in drafting the clauses of the agreement, Kontrak Hukum can help Sobat KH to make or review Sobat KH’s Employee Stock Ownership Agreement.
KH pals do not need to worry about using legal services at Kontrak Hukum because Kontrak Hukum has been trusted in solving legal problems.
Kontrak Hukum also guarantees that your data and information will be safe and protected.
Furthermore, KH pals can directly visit the
Now KH Friend, that’s an explanation of
If you have any questions about ESOP or want to consult about other legal matters, don’t hesitate to contact Kontrak Hukum at the
