SEBI gives companies more time to align ESOPS with listing norms

The Securities and Exchange Board of India (SEBI) has extended the date for compliance with listing guidelines for employee stock options schemes till 31 December 2013.

SEBI today clarified that the compliance with listing norms are applicable to all employee benefit schemes involving the securities of the company provided that the schemes are set up, managed or financed by the company directly or indirectly.

The amended guidelines for equity listing agreement are applicable if the company has set up the scheme or the trust /agency managing the scheme; or if the company has direct or indirect control over the affairs of the scheme or the trust/agency managing the scheme; or if the company has extended any direct or indirect financial assistance to the employee benefit schemes or the trust/agency managing such schemes.

The amended equity listing agreement mandates that all the employee benefit schemes involving the securities of the company should be in compliance with SEBI (ESOS and ESPS) Guidelines, 1999 and any other guidelines, regulations etc framed by SEBI in this regard.

The clause also required that all the employee benefit schemes already framed and implemented by the company involving dealing in the securities of the company, before the amendments should be aligned with and made to conform to SEBI (ESOS and ESPS) Guidelines, 1999 by 30 June 2013.

SEBI has now decided to extend the time limit for such alignment to 31 December 2013. However, further grant of options from the date of the circular, ie, 17 January 2013, would be strictly in accordance with SEBI (ESOS and ESPS) Guidelines 1999. Accordingly, there will not be any grant of options to employees ineligible under Clause 4.2 and 4.3 of the SEBI (ESOS and ESPS) Guidelines 1999 from 17 January 2013.

Employee benefit trusts, which have already acquired securities of the company from secondary market before the date of the circular of 17 January 2013, may continue to hold such securities beyond the date specified for alignment of the schemes with SEBI (ESOS and ESPS) Guidelines 1999, ie, 31 December 2013, provided that the schemes have been aligned with SEBI (ESOS and ESPS) Guidelines 1999 and such securities are used only in accordance with such aligned schemes.

Existing employee benefit schemes involving securities of the company, which does not involve granting of options to/ purchase of securities by employees, would be permitted to either:

  • Hold the securities of the company already acquired by them beyond 31 December 2013 provided the schemes have been aligned with SEBI (ESOS and ESPS) Guidelines 1999; or
  • Dispose of the securities of the company held by them by 31 December 2013.
  • Listed companies should disclose the following information to the stock exchanges in the prescribed format:
  • Details of benefits granted/ shares allotted in the past up to 17 January 2013 in pursuance of employee benefit schemes involving securities of the company which are not in alignment with SEBI (ESOS and ESPS) Guidelines 1999, to the stock exchanges in the format prescribed at Annexure I, by 30 June 2013;
  • Details of benefits due/options granted and pending exercise as on 17 January 2013 in pursuance of employee benefit schemes involving securities of the company which are not in alignment with SEBI (ESOS and ESPS) Guidelines 1999, to the stock exchanges in the format prescribed by 30 June 30, 2013;
  • Details of allotments made/benefits granted post 17 January 2013 up to 31 December 2013 pursuant to employee benefit schemes involving securities of the company, which are not in alignment with SEBI (ESOS and ESPS) Guidelines 1999 in the format prescribed at Annexure III within 7 days from the end of each quarter.

The details pertaining to the quarter ended 31 March 2013 should also be disclosed along with the quarter ending 30 June 2013.