An employee-equity exit review should identify the plan, grant, vesting history, exercise window and the applicable leaver provisions. Check corporate approvals, tax and foreign-exchange issues where relevant. Resignation, termination and a disputed dismissal may have different consequences under the documents and applicable law.
The business situation
An employee resigns shortly before a vesting date. HR relies on the employment agreement, while the grant letter refers to a different notice-period rule. Finance calculates vested options without determining which document governs or when employment ends for plan purposes.
Employment obligations depend on the establishment, location, worker category and facts of the relationship. A designation or payroll code rarely settles classification. Central legislation, applicable state rules, shops and establishments requirements, employment terms and industrial arrangements must be mapped together.
What needs examining
01. Reconstruct the grant and vesting record
Collect the scheme version, grant acceptance, vesting schedule and any amendments or acceleration decisions. Reconcile options granted, vested, exercised, lapsed and cancelled. Do not rely on a cap-table screenshot without checking the underlying approvals. The records should identify the issuer and whether the arrangement concerns Indian or foreign-group equity.
02. Test the leaver provisions against the event
Review the definitions of cessation, good leaver, bad leaver, cause and notice period. Assess discretion and the authority to exercise it. Where facts are disputed, preserve the alternative calculations and the legal issue rather than treating one label as established. Contractual provisions remain subject to applicable law.
03. Coordinate implementation across functions
Record the last exercise date and any required employee communication, withholding or reporting steps. Review foreign-exchange and securities implications where the grant structure requires it. A separation agreement should expressly address equity if that is intended, with a clear account of what rights are settled and by whom.
Law, contract and recommended practice
Check the applicable Labour Codes, commencement and transitional provisions, central or state rules, and continuing state legislation for the establishment. POSH requirements arise separately under the 2013 statute. A group-wide policy cannot displace mandatory local protections.
Connect the control to the evidence
Use this table to scope the review. The legal basis and the practical control are identified separately.
| Obligation or objective | Practical control | Evidence to retain |
|---|---|---|
| Corporate and legal assessment Establish valid plan and grant terms | Approval and document hierarchy review | Scheme, resolutions and grant record |
| Contractual control Calculate the correct exit treatment | Event-specific vesting and leaver analysis | Reconciled entitlement schedule |
| Recommended practice Avoid missed implementation steps | HR, finance and company-secretarial coordination | Communication and action checklist |
Records to prepare
Bring the complete, current record to the review. Preserve earlier versions where a change or disputed event makes them relevant.
Common questions
Does resignation automatically cancel all options?
No. The scheme, grant terms, vesting status and applicable law determine the treatment. Vested and unvested options may be treated differently.
Can HR extend an exercise window informally?
Check the plan's amendment and discretion provisions and the required corporate authority. An informal assurance may create a dispute without validly changing the scheme.
Issue a reconciled equity statement with the separation process. Identify any disputed assumption and the authority needed to resolve it before an exercise deadline passes.
Legislation & official resources
These references identify the governing frameworks. Confirm the current text, relevant amendments and applicable judicial position for the matter.
- Labour Codes — official ministry resourcesMinistry of Labour & Employment · Read with applicable commencement notifications, central or state rules and establishment-specific requirements.
- POSH Act, 2013 — official legislative portalIndia Code · Government of India · The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 requires a separate process assessment.
This note is general information. The scenario is hypothetical and does not describe a client matter. The legal result depends on the facts, documents, jurisdiction and operative law. No individual lawyer review is represented by the preparation date.
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