PR No. 109/2013

Mumbai
November 20, 2013

The SEBI has issued this discussion paper for public comments to replace the SEBI (ESOS & ESPS) Guidelines, 1999. The proposed guidelines are issued to provide for a regulatory framework for all kinds of employee benefit schemes, address the concerns of composition of employee welfare trusts, disclosures and to enable secondary market transactions with adequate safeguards. The discussion paper includes matters and proposed changes such as:

1. What types of ESOP Schemes should be covered under proposed new Regulations?

2. How would Welfare Scheme like the ones mentioned below be covered? Should there be a different sort of regulations for Trusts covering below –

a. General Employee Benefit Scheme: Where benefits like education, scholarship, medical, etc are provided to employees using appreciation from underlying shares or from other funds like corpus, investment in shares of other companies, mutual fund, FDs, donations, etc. OR

b. Retirement Benefit Scheme: Superannuation, Provident Fund, Gratuity, etc. OR

c. Any other such employee benefit scheme

3. Mode of setting up of schemes viz. Should they be directly granted and administered by the company or should there be a flexibility in the regulations to grant, manage and administer through a Trust

4. What are the key provisions, power, duties which need to be captured in the relevant agreement including trust deed meant for administering the scheme through agencies/Trust etc. Supporting explanation, if any

5. Whether Secondary Market acquisitions should be permitted in Company’s own or related entity’s shares for:

a. Employee Share Benefit Scheme (ESOP / ESPS / SAR)

b. General Employee Benefit Scheme

c. Retirement Benefit Scheme

6. Whether there should be any limit on the quantity of shares acquired through Secondary Market for both ESOP and Non- ESOP i.e. other welfare Schemes? If yes please provide a limit.

7. Whether there should be a limit on funding provided by the Company for such proposed secondary market acquisition. If yes, please provide proposed limit

8. What should be norms or limits (checks & balances) for the Schemes Specifically with respect to the following?

a. What should be the minimum holding period for purchase of shares acquired through Secondary Market to ensure that it is for long term and for benefit of employees?

•For ESOP

•For Non–ESOP

9. Should there be a complete ban on sale of shares by the Trust specifically if the intent of the Trust is to use the Secondary Market for the purpose of objective of scheme

• or ESOP

• or Non – ESOP

If answer to above is no then in what circumstances should the Trust be allowed to sell shares acquired through Secondary Market?

10. If the Scheme is set up under a Trust whether an Independent Trustee (s) should be appointed to administer it? What should be the parameters for appointment of such Independent Trustee?

11. How should the shares held under the Schemes be classified (Promoter / Public)? Should it be dependent on the mode of setting up of the schemes?

12. What kinds of details on the scheme should be disclosed publicly (e.g. to stock exchange)? What ought to be the continuous disclosure requirements and the periodicity for such disclosures ?

13. Any clause(s) of existing SEBI ESOP Guidelines that may need amendment in the light of the recent developments and the suggested revised clause

14. Any other aspects or matter which should be considered while drafting the new omnibus Regulations

The discussion paper is open for public comments till 05 December 2013. Read more

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