Amendment to SEBI Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines 1999
Summary
The document establishes the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. It provides comprehensive definitions for key terms such as employee, ESOS, ESPS, exercise price, and market price within Section 2. These guidelines apply to any company whose shares are listed on a recognized stock exchange in India. This section outlines the eligibility criteria for employees to participate in Employee Stock Option Schemes, excluding promoters and significant shareholders. It mandates the formation of a Compensation Committee to administer the scheme and formulate its detailed terms and conditions. The text further requires shareholder approval via special resolution for offering ESOS and specifies disclosure requirements regarding option valuation methods. This section outlines the non-transferability of options, lock-in periods, and consequences for failure to exercise or terminate employment. It mandates specific disclosures in the Directors' Report regarding option grants, vesting, pricing, and accounting impacts. Finally, it addresses accounting policies, auditor certification requirements, and disclosure ob
Text
These Guidelines have been issued by Securities and Exchange Board of India under Section 11 of the Securities and Exchange Board of India Act, 1992.
These Guidelines may be called the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999.
"employee" means (a) a permanent employee of the company working in India or out of India; or (b) a director of the company, whether a whole time director or not; or (c) an employee as defined in sub-clauses (a) or (b) of a subsidiary, in India or out of India, or of a holding company of the company.
"employee compensation" means the total cost incurred by the company towards employee compensation including basic salary, dearness allowance, other allowances, bonus and commissions including the value of all perquisites provided, but does not include: (a) the fair value of the option granted under an Employee Stock Option Scheme; and (b) the discount at which shares are issued under an Employee Stock Purchase Scheme.
"employee stock option" means the option given to the whole-time Directors, Officers or employees of a company which gives such Directors, Officers or employees, the benefit or right to purchase or subscribe at a future date, the securities offered by the company at a predetermined price.
"employee stock option scheme (ESOS)" means a scheme under which a company grants employee stock option.
"employee stock purchase scheme (ESPS)" means a scheme under which the company offers shares to employees as part of a public issue or otherwise.
"ESOS shares" means shares arising out of exercise of options granted under ESOS.
"ESPS shares" means shares arising out of grant of shares under ESPS.
"exercise" means making of an application by the employee to the company for issue of shares against option vested in him in pursuance of the ESOS.
"exercise period" means the time period after vesting within which the employee should exercise his right to apply for shares against the option vested in him in pursuance of the ESOS.
"exercise price" means the price payable by the employee for exercising the option granted to him in pursuance of ESOS.
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Source: SecMarx — Amendment to SEBI Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines 1999. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.