Circular, CIR/CFD/DIL/7/2013, dated May 13, 2013
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, 1999 and Equity Listing Agreement
1.
SEBI vide Circular No. CIR/CFD/DIL/3/2013 dated January 17, 2013 made amendments
to Equity Listing Agreement and SEBI (Employee Stock Option Schemes and
Employee Stock Purchase Schemes) Guidelines, 1999 ("SEBI (ESOS and ESPS)
Guidelines, 1999"). The amendment to Equity Listing Agreement through
insertion of Clause 35 C mandated that all the employee benefit schemes
involving the securities of the company shall be in compliance with SEBI (ESOS
and ESPS) Guidelines, 1999 and any other guidelines, regulations etc. framed by
SEBI in this regard. The said clause also required that all the employee
benefit schemes already framed and implemented by the company involving dealing
in the securities of the company, before the insertion of this clause shall be
aligned with and made to conform to SEBI (ESOS and ESPS) Guidelines, 1999 by
June 30, 2013.
2.
The amendment to SEBI (ESOS and ESPS) Guidelines 1999 also provided that no
ESOS/ESPS schemes shall involve acquisition of securities of the company from
the secondary market.
3.
SEBI is in receipt of various representations seeking clarification on the
applicability of the circular as well as on the continued holding of securities
already acquired by employee benefit trusts before the date of the circular,
beyond June 30, 2013, i.e. the last date by which listed companies are required
to align their employee benefit schemes involving securities of the company
with SEBI (ESOS and ESPS) Guidelines 1999.
4.
It has been decided to issue following clarifications on the said topics:
5.
Applicability of the circular
The
Circular No. CIR/CFD/DIL/3/2013 dated January 17, 2013 is applicable to all
employee benefit schemes involving the securities of the company provided that
the schemes are set up, managed or financed by the company directly or
indirectly. Thus, the circular shall be applicable if any of the following
conditions are satisfied:
a) if the company has set up the
scheme or the trust/agency managing the scheme; or
b) if the company has direct or
indirect control over the affairs of the scheme or the trust/agency managing
the scheme; or
c) if the company has extended any
direct or indirect financial assistance to the employee benefit schemes or the
trust/agency managing such schemes.
6.
Extension of time for aligning the employee benefit schemes with SEBI
Guidelines
The
circular dated January 17, 2013 required that all employee benefit schemes
involving securities of the company shall be aligned with and made to conform
to SEBI (ESOS and ESPS) Guidelines by June 30, 2013. It has been decided to
extend the time limit for such alignment to December 31, 2013. Accordingly, in
Clause 35C (ii) of the Equity Listing Agreement, the words "June 30,
2013" shall be replaced with "December 31, 2013".
However,
further grant of options from the date of the circular i.e. January 17, 2013,
shall be strictly in accordance with SEBI (ESOS and ESPS) Guidelines 1999.
Accordingly, there shall not be any grant of options to employees ineligible
under Clause 4.2 and 4.3 of the SEBI (ESOS and ESPS) Guidelines 1999 from
January 17, 2013.
7.
Holding of securities by Trusts beyond December 31, 2013
Employee
benefits trusts which have already acquired securities of the company from
secondary market before the date of the circular No. CIR/CFD/DIL/3/2013 i.e
January 17, 2013, may continue to hold such securities beyond the date
specified for alignment of the schemes with SEBI (ESOS and ESPS) Guidelines
1999 i.e. December 31, 2013, provided that the schemes have been aligned with
SEBI (ESOS and ESPS) Guidelines 1999 and such securities are used only in accordance
with such aligned schemes.
8.
Continued holding of securities by non-ESOP employee benefit schemes
Existing
employee benefit schemes involving securities of the company which does not
involve granting of options to/ purchase of securities by employees shall be
permitted to either:
a) hold the securities of the
company already acquired by them beyond December 31, 2013 provided the schemes
have been aligned with SEBI (ESOS and ESPS) Guidelines 1999; or
b) dispose-off the securities of
the company held by them by December 31, 2013.
9.
Additional disclosures
Listed
companies shall disclose the following information to the stock exchanges in
the prescribed format:
a) the details of benefits
granted/shares allotted in the past upto January 17, 2013 in pursuance of
employee benefit schemes involving securities of the company which are not in
alignment with SEBI (ESOS and ESPS) Guidelines 1999, to the stock exchanges in
the format prescribed at Annexure I, by June 30, 2013.
b) the details of benefits
due/options granted and pending exercise as on January 17, 2013 in pursuance of
employee benefit schemes involving securities of the company which are not in
alignment with SEBI (ESOS and ESPS) Guidelines 1999, to the stock exchanges in
the format prescribed at Annexure II, by June 30, 2013.
c) the details of allotments
made/benefits granted post January 17, 2013 up to December 31, 2013 pursuant to
employee benefit schemes involving securities of the company which are not in
alignment with SEBI (ESOS and ESPS) Guidelines 1999 in the format prescribed at
Annexure III within 7 days from the end of each quarter. The details
pertaining to the quarter ended March 31, 2013 shall also be disclosed along
with the quarter ending June 30, 2013.
10.
This circular is being issued in exercise of the powers under Section 11 read
with Section 11A of the Securities and Exchange Board of India Act, 1992.
11.
This circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework” and “Issues and Listing”.
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Click here to download the complete text of the above Circular in PDF Format including the Annexures.
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