Employee stock option rules require shareholder approval and detailed disclosures on vesting, exercise, transfer, and reporting. Rule 12 requires companies (other than listed entities subject to SEBI ESOS rules) to obtain shareholder approval by special resolution before issuing an Employees Stock Option Scheme, to specify eligible employees with promoter/major-shareholder exclusions (subject to startup relief), and to disclose comprehensive scheme terms-total options, eligible classes, appraisal and vesting rules, exercise price and period, lock-in, valuation, lapse and post-termination exercise conditions-while imposing non-transferability, administrative register and directors' report disclosure obligations.