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Employee Share Option Plans (ESOPs)

Employee Share Option Plans (ESOPs) are schemes that allow employees to acquire shares in the company they work for, either at a discounted price or for free, as a form of incentive and reward. It is a one of the types of Employees’ share incentive scheme (ESIS). ESOPs can help companies to attract, retain and motivate their key employees, as well as align their interests with those of the shareholders.

At HHS Lawyers, we have extensive experience in advising clients on the design, implementation and management of ESOPs in the UAE. We can help you to navigate the legal and regulatory framework governing ESOPs, as well as the tax and accounting implications of such schemes. Whether you are a public or private company, a start-up or an established business, we can tailor an ESOP solution that suits your specific needs and objectives.

What is an Employee Share Option Plan (ESOP) and How Does It Work?

An Employee Share Option Plan (ESOP) is a type of equity compensation plan that gives employees the right to buy shares of the company at a discounted price, usually lower than the market price. ESOPs are designed to motivate employees, align their interests with the shareholders, and reward them for their performance and loyalty. ESOPs can also offer tax benefits to the company and the employees, depending on the jurisdiction and the plan structure. 

ESOPs is a different type of remuneration plans that aim to retain, reward and motivate employees. By giving employees a stake in the company’s performance through an ESOP, employees are encouraged to work harder and smarter, as they will benefit from the company’s growth and success. ESOPs also help employers to keep and attract talented staff members, as the rewards offered under an ESOP increase over time depending on how long an employee stays with the company. 

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Employee Share Option Plans in Dubai

Benefits of Employee Share Option Plans 

ESOPs can offer various benefits to both employers and employees, such as:

  • For employers, ESOPs can help to create a culture of ownership and loyalty among the employees, as well as improve their performance and productivity. 
  • It can also reduce the cash outflow for salaries and bonuses, and enhance the company’s reputation and attractiveness in the market.
  • ESOPs can provide an opportunity for employees to participate in the company’s growth and success, as well as diversify their income and wealth.

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Apply for Employee Share Option Plans in UAE

How to Apply for Employee Share Option Plans in UAE

ESOPs is a type of Employees Incentive Program (EIP) which is a scheme that allows employees of a company to own shares in the company’s capital as a form of incentive and reward. The Securities and Commodities Authority (SCA) regulates the ESOPs and requires the company to obtain its approval before issuing incentive shares to employees. The following are the steps and procedures to apply for ESOPs:

Step 1: Submit an Application to the SCA

The company should submit an application to the SCA to approve the issuance of ESOPs, along with all the required documents. 

Step 2: Hold the General Assembly Meeting

After obtaining the SCA’s approval, the company should complete the procedures for holding the general assembly meeting to approve the ESOPs. 

Step 3: Request the SCA’s Approval for Issuing Incentive Shares

At least one month before the end of the ESOPs period, the company should submit a request to the SCA to obtain its approval for issuing incentive shares to employees in accordance with the EIP’s bylaws and the company’s capital increase. 

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Requirements and Documents for ESOPs in Dubai

Requirements and Documents for ESOPs 

The SCA has set some requirements and documents for the ESOPs to ensure its compliance and transparency. The following are the main requirements and documents for the ESOPs: 


  • The company’s capital should be fully paid, and the net shareholders’ equity should not be less than the paid-up capital, and the market value should not be less than the nominal value of the original shares.
  • The size of the incentive shares issued in ESOPs should not exceed 2.5% of the paid-up capital.
  • The company should issue a special resolution by the general assembly approving the ESOPs.

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HHS ESOP Lawyers

Why choose HHS ESOP Lawyers for your ESOP in Dubai?

At HHS Lawyers, we have a team of qualified and experienced lawyers who can help you with all your ESOP needs in Dubai. 

  • We can advise you on the best way to structure and implement an ESOP that suits your business objectives and complies with the UAE laws and regulations. 
  • We can draft and review the ESOP documents and agreements and assist you with the registration and approval processes. 
  • Our legal experts can also provide you with ongoing support and guidance on how to manage and monitor your ESOP and deal with any issues or disputes that may arise.

If you are interested in setting up an ESOP for your UAE-based employees, please contact us today for a consultation. We will be happy to answer your questions and provide you with a customized solution that meets your expectations and requirements.

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