COVID-19 Pandemic :- SEBI Eases Vesting Period Restrictions on ESOPs and SAR

 

 


 

The Indian market regulator (SEBI) has eased the restrictions on the minimum vesting period on the Employee Stock Option Plan (ESOP) when the ESOP holder dies. This is expected to help the families of the deceased ESOP holders avoid running into an immediate financial crunch. 

The SEBI’s circular on the easing of ESOP vesting period restrictions say that the mandatory lock-in period of at least one year shall not be applicable on the ESOPS and Stock Appreciation Rights (SAR), which had been granted to the deceased employee under the Share Based Employee Benefit (SBEB) regulations. 

Relaxation: -Available for the families who have lost ESOP and SAR holders on or after the 1st of April 2020.

 Securities Exchange Board of India (SEBI) vide its Circular dated June 15, 2021, has provided relaxation in the provision related to a minimum vesting period of one year in case of Employee Stock Options (ESOP) and Stock Appreciation Rights (SAR).

Details of circular are given below :-

 

CIRCULAR

SEBI/HO/CFD/DCR2/CIR/P/2021/576

June 15, 2021

To

All Listed Companies
All Recognized Stock Exchanges
All Registered Merchant Bankers

Dear Sir/Madam,

Sub: Relaxation from the requirement of minimum vesting period in case of death of employee(s) under SEBI (Share Based Employee Benefit) Regulations, 2014

1. Presently, regulation 18(1) and 24(1) of the SEBI (Share Based Employee Benefit) Regulations, 2014 (“SBEB Regulations”) provides that there shall be a minimum vesting period of one year in case of employee stock options (“options”) and stock appreciation rights (“SAR”).

2. Further, regulation 9(4) of the SBEB Regulations states that in the event of death of the employee while in employment, all the options, SAR or any other benefit granted to him/herunder a scheme till such date shall vest in the legal heirs or nominees of the deceased employee.

3. In view of the COVID-19 pandemic situation, to provide relief to the families of the deceased employees of listed companies, it has been decided as under:

a. the provisions under the SBEB Regulations relating to minimum vesting period of one year shall NOT apply in case of death (for any reason) of an employee and in such instances all the options, SAR or any other benefit granted to such employee(s)shall vest with his/her legal heir or nominee on the date of death of the employee; and

b. this relaxation shall be available to all such employees who have deceased on or after April 01, 2020.

4. This Circular is issued in exercise of powers conferred by Section 11(1) of the Securities and Exchange Bord of India Act, 1992

5. A copy of this circular is available on SEBI website at http://www.sebi.gov.in under the categories “Legal Framework/ Circulars.”

Yours faithfully,

Readers may forward their feedback/suggestion & queries at cajayprakashpandcompany@gmail.com or Leave your thoughts in comment section in order to help other member/readers.

 

Disclaimer:

The purpose of this is to share knowledge and it is for education purpose only. This does NOT constitute NOR does this form part of neither it is to be construed as, A LEGAL OPINION. The analysis is solely based on the reading abilities of the Author. They may be correct/incorrect as per you. No representation or warranty, express or implied, is made or given in respect of any information provided. UNDER NO circumstances should any recipient rely on this communication as a basis for any legal decision. The views expressed are of personal to the author. They do not reflect the views of any organization he may be directly/indirectly associated with. Neither author nor any of its affiliates accepts any legal liability, or responsibility, for, or provides any assurance or guarantee of accuracy, authenticity, completeness, correctness, dependability, reliability, suitability or timeliness of, any part of this article. The contents of this article are based only on the understanding of the Law, Rules, Notifications, etc. of the author and THEY ARE NOT BASIS FOR ANY LEGAL OPINION.




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