The deadline for companies to align their Employee Stock Option Schemes (ESOP) and Employee Stock Purchase Schemes (ESOS) with SEBI regulations has been extended from June 30 to December 31.
SEBI has clarified that its circular on employee benefits would be applicable only in cases where the company has set up the trust/agency. It would also be applicable if the company has either direct/indirect control over the employee benefit scheme or has extended financial assistance to the scheme.
Beyond December 31, employee benefit trusts would be allowed to hold company shares bought from the secondary market only when the shares had been purchased before January 17. This would be subject to alignment with extant ESOP/ESOS guidelines, said SEBI.
SEBI had introduced a new Clause 35C in the equity listing agreement in January.
This circular had prohibited ESOP and ESOS schemes (held by trusts) from buying their own company shares from the secondary market.
Existing employee benefit schemes (not involving granting of options/purchase of securities by employees) have been permitted to hold company shares already acquired beyond December 31, only if the scheme is aligned to SEBI guidelines.
Otherwise, the schemes have to sell the shares by December 31.
raghavendrarao.k@thehindu.co.in