ESOP Policy and Compensation Committee Governance

Put board-level governance around your ESOPs, before investors ask for it. Patron Accounting constitutes your Section 178 Nomination and Remuneration Committee, drafts the ESOP and remuneration policy, writes the committee charter, and maps decision rights so equity decisions are made the right way.

As a company scales, ESOP decisions outgrow informal founder calls and need a board organ to own them. Section 178 provides that organ, the Nomination and Remuneration Committee, which formulates the remuneration policy, oversees ESOP grants, and signals governance maturity to investors. Patron Accounting builds the committee, the charter and the policy as a single advisory engagement.

Content is reviewed quarterly for accuracy.

Companies that have outgrown informal equity decisions, or are required by law to constitute an NRC, need this governance layer.

• Listed public companies, which must constitute an NRC under Section 178 and SEBI LODR.
• Public companies above the paid-up capital, turnover or borrowings thresholds.
• Growth-stage private companies adopting a committee voluntarily before listing.
• Companies preparing for a funding round where investors expect board governance.

Statutory anchor: under Section 178, every listed public company and prescribed public companies, those with paid-up capital of Rs 10 crore or more, turnover of Rs 100 crore or more, or aggregate loans, debentures and deposits exceeding Rs 50 crore, must constitute an NRC of three or more non-executive directors, at least half of them independent.

• Current board composition and director independence details.
• Existing ESOP scheme and any draft remuneration policy.
• Articles of Association and relevant board resolutions.
• Prior committee charters or governance documents, if any.
• Cap table and grant data for decision-rights mapping.
• Investor or SEBI LODR governance expectations, where applicable.

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free ESOP Governance consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

10,000+ Businesses | 4.9 Google Rating | 50,000+ Documents Processed | 15+ Years

Patron Accounting LLP is a CA and CS firm with 15+ years advising boards on committee constitution, charters and corporate governance.

With offices in Pune, Mumbai, Delhi and Gurugram, Patron Accounting serves businesses across India, both in-person and remotely.

Governance sits above ESOP execution. See our ESOP management and compliance services for scheme administration, our ESOP corporate filings for the statutory register and forms, and ESOP management and compliance services for exercise and cap-table events.

For board appointments and the wider calendar, see appointment of director and private limited company compliance. See also the full ESOP services hub.

Governing provision: Section 178 of the Companies Act 2013 requires every listed public company and prescribed public companies to constitute a Nomination and Remuneration Committee of three or more non-executive directors, at least one-half independent.

Applicability: the prescribed thresholds are paid-up capital of Rs 10 crore or more, turnover of Rs 100 crore or more, or aggregate loans, debentures and deposits exceeding Rs 50 crore. Private companies are not mandated, and Section 8 and specified IFSC public companies are exempt.

Listed entities: SEBI LODR Regulation 19 requires all directors of the committee to be non-executive, at least half independent, and the committee to be chaired by an independent director.

Penalty: under Section 178(8), contravention makes the company liable to a penalty of Rs 5 lakh and every officer in default to Rs 1 lakh.

Authoritative sources: the Ministry of Corporate Affairs (Section 178, committees), the Companies Act and Rules, SEBI (LODR Regulation 19), and the ICSI (secretarial standards, governance).

Governance gaps surface fastest in due diligence, when an investor asks who approved a grant and there is no committee or policy to point to. Constitute the committee and write the policy before the round, not during it, so equity decisions already carry a clean board trail.

ESOP governance is what turns equity from an informal founder decision into a board-owned, defensible process.

Patron Accounting LLP, a CA and CS firm with 15+ years of governance experience, constitutes your Section 178 committee, drafts the charter and ESOP policy, and maps decision rights, so your equity decisions are made and recorded the way investors and regulators expect.