SEBI (Share Based Employee Benefits)
Regulations, 2014
Regulations, 2014
With the intent to keep a check on
certain ongoing malpractices under the garb of ESOPs and the trusts to
implement them, SEBI has mandated to bring all share based employee benefit
schemes under the regulatory ambit and has therefore, notified new regulation namely
SEBI (Share
Based Employee Benefits) Regulations, 2014 (“Regulation”) via notification no.
LAD-NRO/GN/2014-15/16/1729 dated October 28, 2014, thereby repealing the existing
SEBI (ESOS & ESPS) Guidelines, 1999. The
provisions of these regulations shall apply to companies whose shares are listed and where the schemes have been set up, funded or
controlled by the listed entity or any of their group companies.
certain ongoing malpractices under the garb of ESOPs and the trusts to
implement them, SEBI has mandated to bring all share based employee benefit
schemes under the regulatory ambit and has therefore, notified new regulation namely
SEBI (Share
Based Employee Benefits) Regulations, 2014 (“Regulation”) via notification no.
LAD-NRO/GN/2014-15/16/1729 dated October 28, 2014, thereby repealing the existing
SEBI (ESOS & ESPS) Guidelines, 1999. The
provisions of these regulations shall apply to companies whose shares are listed and where the schemes have been set up, funded or
controlled by the listed entity or any of their group companies.
Earlier
in an attempt to prohibit companies from buying/selling its own securities in
the secondary market, SEBI had amended the erstwhile ESOP guidelines in
January, 2013. The said Regulations have brought an end to the ongoing dilemma
as to allowance/disallowance of secondary market purchases for ESOPs. SEBI has
allowed secondary market acquisitions by the trusts subject to compliance of
certain conditions.
in an attempt to prohibit companies from buying/selling its own securities in
the secondary market, SEBI had amended the erstwhile ESOP guidelines in
January, 2013. The said Regulations have brought an end to the ongoing dilemma
as to allowance/disallowance of secondary market purchases for ESOPs. SEBI has
allowed secondary market acquisitions by the trusts subject to compliance of
certain conditions.
In
addition to Employee Stock Option Scheme (ESOS) and Employee Stock Purchase
Scheme (ESPS), the Regulation covers the following new employee benefit schemes
which deal in shares of the company:
addition to Employee Stock Option Scheme (ESOS) and Employee Stock Purchase
Scheme (ESPS), the Regulation covers the following new employee benefit schemes
which deal in shares of the company:
a.
Stock Appreciation
Rights Scheme (SARS);
Stock Appreciation
Rights Scheme (SARS);
b.
General Employee
Benefit Scheme (GEBS);
General Employee
Benefit Scheme (GEBS);
c.
Retirement Benefit
Scheme (RBS).
Retirement Benefit
Scheme (RBS).
The companies shall constitute a Compensation Committee for
administration and superintendence of the schemes. Where the scheme is being implemented
through a trust the Compensation Committee shall delegate the administration of
such scheme(s) to the trust. Furthermore, in order
to provide adequate safeguard measures, SEBI has included the requirement of
shareholders approval through special resolution for undertaking secondary
market acquisitions.
administration and superintendence of the schemes. Where the scheme is being implemented
through a trust the Compensation Committee shall delegate the administration of
such scheme(s) to the trust. Furthermore, in order
to provide adequate safeguard measures, SEBI has included the requirement of
shareholders approval through special resolution for undertaking secondary
market acquisitions.
The said move by SEBI seems to be instrumental in aligning the
provisions of the Regulations with the Companies Act, 2013 thereby ensuring
transparency in the operations on one hand and bringing all trusts together
with the welfare schemes involving shares of the listed entities under the
regulatory arena.
provisions of the Regulations with the Companies Act, 2013 thereby ensuring
transparency in the operations on one hand and bringing all trusts together
with the welfare schemes involving shares of the listed entities under the
regulatory arena.
