I joined a startup last year and was promised 2% ESOPs, vesting over 3 years with a 1-year cliff. This was confirmed in an email. However, I haven’t received any legal documents yet. I’m planning to leave after completing my first year. Can an email from the founders be considered legally binding when the company is sold, especially if they don’t honor their promise? If not, what steps should I take now to ensure I’m not left out during the sale?

Apni Law
Apni Law
Law Forum › Category: Corporate › I joined a startup last year and was promised 2% ESOPs, vesting over 3 years with a 1-year cliff. This was confirmed in an email. However, I haven’t received any legal documents yet. I’m planning to leave after completing my first year. Can an email from the founders be considered legally binding when the company is sold, especially if they don’t honor their promise? If not, what steps should I take now to ensure I’m not left out during the sale?
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Apni Law Staff asked 6 months ago

I joined a startup last year and was promised 2% ESOPs, vesting over 3 years with a 1-year cliff. This was confirmed in an email. However, I haven’t received any legal documents yet. I’m planning to leave after completing my first year. Can an email from the founders be considered legally binding when the company is sold, especially if they don’t honor their promise? If not, what steps should I take now to ensure I’m not left out during the sale?

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Apni Law Staff answered 6 months ago

While an email can serve as evidence of the promise, it is not legally binding for ESOPs under Indian law. You need a formal written agreement, preferably a Shareholders Agreement or ESOP plan, outlining the terms. Immediately request a formal agreement from the founders, emphasizing the importance of documentation for your rights in the event of a sale.

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