Turn your vested ESOPs into cash.

You sell shares, not options

An ESOP grant is a right, not a security. Until you exercise — pay the strike price and have shares allotted or transferred to you — there is nothing a buyer can legally take delivery of. Every secondary sale therefore starts with a simple gate: are these options exercised? If yes, you hold unlisted equity shares and can sell them like any other shareholder, subject to your scheme's rules. If not, exercise comes first, and its cost and timing shape the whole transaction.

This matters most for former employees. Nearly every scheme runs a post-exit exercise window — often a few months — after which unexercised vested options lapse entirely. If you have left your company, confirming that window should be your first phone call, not your last.

Two tax events, not one

ESOP taxation confuses people because there are two distinct taxable moments. At exercise, the gap between the fair market value of the shares and the strike price you paid is a perquisite — taxed as salary income, at your slab rate, typically withheld by the employer. At sale, the gap between your sale price and that fair market value at exercise is a capital gain, taxed under the capital-gains regime with the rate depending on how long you held the shares after exercise.

The practical consequence: exercising costs real money (strike price plus perquisite tax) before the sale pays you anything. Sequencing the two legs — lining up a buyer or a firm offer before you exercise — keeps the out-of-pocket window as short as your scheme allows. None of this is tax advice; the calculator above gives you the standard picture to take to your CA.

Company rules: ROFR is a process, not a wall

Most unlisted companies restrict share transfers through their articles or the ESOP scheme — usually a right of first refusal (ROFR) or a board-approval step, occasionally a defined transfer window. Holders often read these clauses as "I can't sell." In practice they mean "I must follow a process to sell." A ROFR requires you to offer the shares to existing shareholders at the buyer's price first; if nobody matches it, the sale to your buyer proceeds.

Following the process is not optional politeness. A transfer that skips a mandatory ROFR notice can be challenged and unwound, which is why serious buyers insist on it. Polemarch's desk prepares the notices and runs the approval mechanics as part of the assisted sale.

The paperwork a clean sale needs

Unlisted share sales settle off-exchange, so the documentation carries the weight an exchange would otherwise carry. Expect to provide or sign:

• A Client Master Report (CMR) from your broker — this proves your demat account details to the buyer's side.
• A delivery instruction slip (DIS) or its electronic equivalent to move the shares off-market.
• A sale agreement (SPA) where the transaction size or scheme mechanics warrant one.
• KYC for both parties — PAN, bank proof, demat details.
• Your exercise records, so the cost basis and holding period are documented for tax filing.

Mistakes we see repeatedly

The most expensive error is letting a post-exit exercise window lapse — vested value simply evaporates. Second is anchoring on a price from a funding round announcement without accounting for the discount buyers of illiquid minority stakes expect; a realistic range up front saves weeks of stalled negotiation. Third is informal deals — selling to an acquaintance on a handshake, without the transfer notices or an agreement — which creates disputes precisely when the shares become valuable. And finally, forgetting that the sale is a taxable event and spending the gross proceeds; set aside the tax before you celebrate.

A structured sale exists to remove all four failure modes: valuation before commitment, process-compliant transfer, complete paper trail, and settlement in T+2 working days of the transfer.