Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021
Summary
This part comprises Chapter I Preliminary of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 amended up to December 04, 2025. Regulation 1 provides the short title, commencement on publication in the Official Gazette, and application to six categories including employee stock option schemes, employee stock purchase schemes, stock appreciation rights schemes, general employee benefits schemes, retirement benefit schemes and sweat equity shares for listed companies meeting specified scheme conditions. Regulation 2 defines terms including Act, appreciation, associate company, Board, company, control, employee, ESOS, ESPS, exercise, GEBS, group and market price. This part defines terms y to yy including merchant banker, option, option grantee, pre-IPO scheme, recognised stock exchange, relevant date, retirement benefit scheme, scheme, secondary acquisition, share, SAR, trust, vesting and vesting period, and provides a residual interpretation clause for undefined words. Chapter II regulation 3 permits implementation of share-based schemes directly or through an irrevocable trust, mandates trust route for secondary acquisition
Text
These regulations may be called the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.
They shall come into force on the date of their publication in the Official Gazette.
The provisions of these regulations shall apply to the following: - (i) employee stock option schemes; (ii) employee stock purchase schemes; (iii) stock appreciation rights schemes; (iv) general employee benefits schemes; (v) retirement benefit schemes; and (vi) sweat equity shares.
The provisions of these regulations shall apply to any company whose equity shares are listed on a recognised stock exchange in India and who seeks to issue sweat equity shares or has a scheme:- (i) for direct or indirect benefit of employees; (ii) involving dealing in or subscribing to or purchasing securities of the company, directly or indirectly; and (iii) satisfying, directly or indirectly, any one of the following conditions: - a. the scheme is set up by the company or any other company in its group. b. the scheme is funded or guaranteed by the company or any other company in its group. c. the scheme is controlled or managed by the company or any other company in its group.
The provisions pertaining to preferential issue as specified in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 shall not be applicable in case of a company issuing new shares in pursuance and compliance of these regulations except wherever specifically provided for in these regulations.
“Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
“appreciation” means the difference between the market price of the share of a company on the date of exercise of SAR or the date of vesting of SAR, as the case may be, and the SAR price;
“associate company” shall have the same meaning as defined under section 2(6) of the Companies Act, 2013 (18 of 2013);
“Board” means the Securities and Exchange Board of India;
“company” shall have the same meaning as defined under section 2(20) of the Companies Act, 2013 (18 of 2013);
“control” shall have the same meaning as defined under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
“emergency” means a situation wherein the trust is in need of funds to meet the commitment(s) arising out of the objective(s) of the scheme;
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Source: SecMarx — Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.