Clarification on SEBI Circular No. CIR/CFD/DIL/3/2013 dated January 17, 2013 - Amendments to SEBI Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines
Summary
This circular clarifies the applicability of SEBI's ESOS and ESPS Guidelines to employee benefit schemes managed or financed by listed companies. It extends the deadline for aligning existing schemes with the guidelines from June 30, 2013, to December 31, 2013, while prohibiting new option grants after January 17, 2013, if ineligible. The document permits trusts holding securities acquired before the circular date to continue holding them under specific conditions and mandates detailed disclosures of non-aligned schemes.
Text
The circular is applicable to all employee benefit schemes involving company securities provided they are set up, managed, or financed by the company directly or indirectly, including cases where the company sets up the scheme, has control over it, or provides financial assistance.
The time limit for aligning employee benefit schemes with SEBI Guidelines is extended to December 31, 2013, replacing 'June 30, 2013' in Clause 35C (ii) of the Equity Listing Agreement.
Further grant of options from January 17, 2013, shall be strictly in accordance with SEBI Guidelines, and no options shall be granted to employees ineligible under Clause 4.2 and 4.3 of the SEBI (ESOS and ESPS) Guidelines 1999.
Employee benefits trusts that acquired securities from the secondary market before January 17, 2013, may continue to hold such securities beyond December 31, 2013, provided the schemes are aligned with SEBI Guidelines and securities are used only in accordance with such aligned schemes.
Existing employee benefit schemes not involving granting of options or purchase of securities by employees may either hold already acquired securities beyond December 31, 2013, provided aligned with Guidelines, or dispose off such securities by December 31, 2013.
Listed companies shall disclose details of benefits granted/shares allotted in the past up to January 17, 2013, in pursuance of non-aligned schemes to stock exchanges in Annexure I format by June 30, 2013.
Listed companies shall disclose details of benefits due/options granted and pending exercise as on January 17, 2013, in pursuance of non-aligned schemes to stock exchanges in Annexure II format by June 30, 2013.
Listed companies shall disclose details of allotments made/benefits granted post January 17, 2013, up to December 31, 2013, pursuant to non-aligned schemes in Annexure III format within 7 days from the end of each quarter.
This circular is issued in exercise of the powers under Section 11 read with Section 11A of the Securities and Exchange Board of India Act, 1992.
Source: SecMarx — Clarification on SEBI Circular No. CIR/CFD/DIL/3/2013 dated January 17, 2013 - Amendments to SEBI Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.