GoKwik, an Indian digital commerce startup, has amended its ESOP Plan 2021 to include a non-compete clause that allows the company to revoke both vested and unvested employee stock options if employees join nine specified competing firms or breach the clause within two years of departure.
- Non-compete clause impacts vested and unvested ESOPs for current and former employees.
- Nine competitor firms are explicitly named as restricted entities.
- Clause applies during employment and two years after exit, with limited exceptions.
What happened
GoKwik has inserted a stringent non-compete clause into its ESOP Plan 2021 that prohibits employees from joining or associating with nine specific competitor companies. This clause empowers GoKwik to revoke both unvested options and vested-but-unexercised options if the employee is found to have breached the restriction. The change was communicated to employees in August 2026 amid notable senior-level departures.
The policy applies retroactively to all stock options granted before and after the clause’s introduction, affecting current and former employees who continue to hold ESOPs. Notably, the company’s board can cancel unexercised vested options in addition to unvested ones, placing significant restrictions on exercising stock option rights. The restriction period extends through an employee’s tenure and continues for two years post-employment.
Why it matters
This policy revision marks a significant development in India’s startup ecosystem, where ESOPs have become a primary means of employee wealth creation and retention. By linking ESOP rights directly to a non-compete clause, GoKwik sets a precedent that raises critical questions about employee mobility and the enforceability of ESOPs after leaving a company.
Employees who have completed their vesting period but not yet exercised their options risk losing those vested rights if they join one of the listed competitors. This creates a potential 'golden handcuff' that could discourage employees from pursuing career opportunities in certain competing startups, complicating exits and liquidity options in the Indian tech sector.
What to watch next
Stakeholders should monitor how other startups in India respond to GoKwik’s policy, as this could trigger wider adoption of restrictive ESOP conditions tied to non-compete agreements. The focus will also be on whether employees challenge the enforceability of such clauses under Indian employment and securities law.