SEBI: PROPOSES TO RATIONALIZE PROVISIONS OF SHARE BASED EMPLOYEE BENEFITS, SWEAT EQUITY REGULATIONS (ESOP)
SEBI releases Discussion Paper proposing to further streamline and rationalize the SEBI (Share Based Employee Benefits) Regulations, 2014 (‘SBEB Regulations’) and SEBI (Issue of Sweat Equity) Regulations, 2002 (‘Sweat Equity Regulations’), to make them more robust and bring them in sync with the global practices and ease of doing business, seeks public comments by July 25, 2021; Apprises that in this regard, an Expert Group was constituted, which has submitted its Report with certain recommendations, majorly proposing that – (i) the objectives for which issuance of sweat equity shares are permitted be included in the Regulations, and the maximum limit on the quantum of sweat equity shares that may be issued by a company should also be incorporated, (ii) the lock-in period for sweat equity shares and its pricing formula should be consistent with the ICDR Regulations; W.r.t. scope of employees to be covered under the SBEB Regulations, suggests that keeping in mind the current employment practices, non-permanent employees may also be considered for eligibility to receive share-based employee benefits, accordingly, “employees” as defined by companies be made eligible under the SBEB Regulations, as opposed to earlier position covering only “permanent employees”; Report posits that upon winding up of schemes / trust, transfer of shares or monies held by a trust should be permitted to one or more existing share-based employee benefit schemes under the SBEB Regulations, subject to approval of shareholders.
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