The Securities and Exchange Board of India (SEBI) has issued the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Amendment) Regulations, 2025, effective from their publication in the Official Gazette. These amendments are made under the SEBI Act, 1992, and relevant provisions of the Companies Act, 2013, along with the Companies (Share Capital and Debentures) Rules, 2014. The key change introduced is the insertion of a new Regulation 9A in the existing 2021 framework. Under this provision, employees who are identified as promoters or part of the promoter group in the draft offer document for an initial public offering (IPO) will now be allowed to continue holding or exercising stock options, stock appreciation rights (SAR), or other benefits that were granted at least one year before the draft offer document was filed with SEBI. Such continuance will remain subject to compliance with the terms of the scheme, these regulations, and other applicable laws. The amendment provides clarity on treatment of employee stock benefits for individuals categorized as promoters in IPO-bound companies, ensuring that previously granted entitlements remain valid while maintaining regulatory safeguards.
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 8th September, 2025
(SHARE BASED EMPLOYEE BENEFITS AND SWEAT EQUITY) (AMENDMENT) REGULATIONS, 2025
F. No. SEBI/LAD-NRO/GN/2025/262.—In exercise of the powers conferred by sections 11, 11A and 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with sections 54 and 62 of the Companies Act, 2013(18 of 2013) and rules 8 and 12 of the Companies (Share Capital and Debentures) Rules, 2014, the Board hereby makes the following regulations to amend the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, namely, –
1. These regulations may be called the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Amendment) Regulations, 2025.
2. They shall come into force from the date of their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, –
I. After the existing regulation 9, the following new regulation shall be inserted, namely,-
“9A. Employee identified as promoter or part of the promoter group in the draft offer document.
An employee who is identified as a “promoter” or part of the “promoter group” in the draft offer document filed by a company with the Board in relation to an initial public offering, and who was granted options, SAR or any other benefit under any scheme at least one year prior to filing of the draft offer document, shall be eligible to continue to hold and/or exercise such options, SAR or any other benefit, in accordance with its terms and subject to compliance with these regulations and other applicable laws.”
AMIT PRADHAN, Executive Director
[ADVT.-III/4/Exty./347/2025-26]
Footnotes:
1. The Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 were published in the Gazette of India on 13th August, 2021 vide No. SEBI/LAD-NRO/GN/2021/40.
