Employee Share Ownership Plan ESOP is nothing but an option to buy the company's share at a certain price. This could either be at the market price or at a preferential price. When you invest in shares, you do not invest in the market. You invest in the equity shares of a company. That makes you a shareholder or part owner in the company. There are time limits for availing this scheme. For instance, you can acquire the shares after you complete a particular period of employment. This could be a year, even longer. If you quit your job before this period is complete, the stock options lapse. The ESOP is not taxed on acquiring the shares. You are taxed on the profit you make when you sell the shares or transfer them.