SEBI on Friday, the 18th September,2015 came out with an amendment to the SEBI (Share Based Employee Benefits) Regulations, 2014; thereby bringing about the following changes:
- Amended the definitions of “employee” by removing the employees of Associate Companies from the preview of this regulations.
- In case of a Scheme implemented through trust, the trust is required to hold the shares acquired through secondary acquisition for a minimum period of six months except where they are required to be transferred in the circumstances enumerated in clause (b) of sub-regulation (14) of this regulation; whether off-market or on the platform of stock exchange. (Earlier the mode of transfer was not specified which is now specified.
- The company is required to obtain approval of shareholders by way of separate resolution in the general meeting; the same is to be obtained by the company in case of:
- Grant of option, SAR, shares or other benefits, as the case may be, to employees of subsidiary or holding
or associate company; (Associate Companies removed from the scope)
- Grant of option, SAR, shares or other benefits, as the case may be, to employees of subsidiary or holding
- The new regulations replaced may old rule, regulations & scheme; one of which is:
- All listed companies having existing schemes to which these regulations apply are required to comply with these regulations in their entirety within one year of the same coming into effect, subject to the following exceptions:
- In case of implementation of scheme through trust; the holing of trust to the shown as non-promoter & non-public holding and to ensuring compliance with the requirement of maintaining adequate public shareholding, those trusts holding shares of the company which are shown either as “promoter” or “public shareholding”, shall be permitted to continue to be shown them as such for a further period of only
five yearsthree years; (reduced the period granted for classifying existing trust as ‘promoter’ or ‘public’ from 5 year to 3 years) - trustees of existing trust given a time period of 3 year commencing from 28th October, 2014; to continue to vote in respect of shares held by such trust.
- In case of implementation of scheme through trust; the holing of trust to the shown as non-promoter & non-public holding and to ensuring compliance with the requirement of maintaining adequate public shareholding, those trusts holding shares of the company which are shown either as “promoter” or “public shareholding”, shall be permitted to continue to be shown them as such for a further period of only
- All listed companies having existing schemes to which these regulations apply are required to comply with these regulations in their entirety within one year of the same coming into effect, subject to the following exceptions:
- The said circular can be accessed at the following link: SEBI (Share Based Employee Benefits) (Amendment) Regulations, 2015 dated 18.09.2015