SEBI has issued the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Second Amendment) Regulations, 2025, further revising the 2021 framework governing ESOPs, share-based benefits, and sweat equity issuances. The amendment, effective thirty days after publication in the Official Gazette, introduces significant changes focused on valuation standards. The definition of “valuer” in Regulation 2 has been updated to align fully with Section 247 of the Companies Act, 2013, thereby shifting valuation responsibilities from merchant bankers to independent registered valuers. Regulation 34 has been amended to mandate that all new valuations be conducted only by registered valuers, while merchant bankers are permitted to complete only those valuation assignments already in progress, with a nine-month completion window. Sub-regulations (2) and (3) of Regulation 34 have been removed entirely. The changes aim to standardize valuation practices, enhance independence, and improve governance in share-based employee benefit schemes.
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 3rd December, 2025
(SHARE BASED EMPLOYEE BENEFITS AND SWEAT EQUITY) (SECOND AMENDMENT) REGULATIONS, 2025
F. No. SEBI/LAD-NRO/GN/2025/284.─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) (Second Amendment) Regulations, 2025.
2. They shall come into force on the thirtieth day 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. In regulation 2, in sub-regulation (1), the existing clause (ww) shall be substituted with the following clause, namely,-
“ ww. “valuer” shall have the same meaning as assigned to it under section 247 of the Companies Act, 2013 (18 of 2013) as amended from time to time;”
II. In regulation 34,-
i. in sub-regulation (1), the words and symbol “a merchant banker.” shall be substituted with the words and symbol “an independent registered valuer:”, and thereafter the following proviso shall be inserted,-
“Provided that a merchant banker shall complete the ongoing valuation assignment which has been undertaken prior to the coming into force of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Amendment) Regulations, 2025 within a period of nine months from the date of coming into force of the said regulations.”;
ii. the existing sub-regulations (2) and (3) shall be omitted.
AMIT PRADHAN, Executive Director
[ADVT.-III/4/Exty./522/2025-26]
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.
2. The Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 was amended on-
a) September 8, 2025 by the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Amendment) Regulations, 2025, vide notification No. SEBI/LAD-NRO/GN/2025/262.
