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SEBI panel plans to restructure ESOP rules

SEBI had barred companies from acquiring shares from the secondary market through employee welfare trusts

November 21, 2013 12:08 IST | India Infoline News Service
Market regulator SEBI (Securities and Exchange Board of India) said that companies will have to take shareholders' approval to purchase shares from the markets through trusts that administer stock-related employee benefit schemes, after a SEBI panel proposed changes to existing rules.

SEBI had barred companies from acquiring shares from the secondary market through employee welfare trusts.

SEBI has issued a discussion paper on 'Review of guidelines governing stock related employee benefit schemes', for public comments.

SEBI has issued SEBI (ESOS & ESPS) Guidelines, 1999 to enable listed companies to reward their employees through stock option schemes and stock purchase schemes.
Based on the requests / recommendations received from various market participants, it is proposed to replace the existing guidelines with a set of regulations to ensure better enforceability, provide for a regulatory framework for all kinds of employee benefit schemes involving securities of the company, address the concerns raised with regard to composition of employee welfare trusts, disclosures, etc. and to enable secondary market transactions with adequate safeguards, SEBI said in a notification.

Public comments on the said recommendations may please be e-mailed on or before December 05, 2013

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