**Summary:**
This Securities and Exchange Board of India (SEBI) circular, reference number SEBI/HO/CFD/DCR/CIR/P/2021/576, dated June 15, 2021, announces a relaxation of the minimum vesting period requirement under the SEBI Share Based Employee Benefit (SBEB) Regulations, 2014, in the event of an employee's death. Specifically, Regulations 18(1) and 24(1) of the SBEB Regulations previously mandated a minimum one-year vesting period for employee stock options and stock appreciation rights (SARs). However, Regulation 9(4) already stipulated that upon an employee's death during employment, all options, SARs, or other benefits granted until that date would vest in their legal heirs or nominees.
In light of the COVID-19 pandemic, this circular provides further relief to the families of deceased employees of listed companies. The one-year minimum vesting period will no longer apply in cases of employee death for any reason. Instead, all options, SARs, or other benefits granted to such employees will vest with their legal heir or nominee on the date of the employee's death. This relaxation applies to employees who died on or after April 1, 2020.
This circular is issued under the authority of Section 11(1) of the Securities and Exchange Board of India Act, 1992. The complete circular is available on the SEBI website (www.sebi.gov.in) under the "Legal Framework Circulars" section. For further information, contact Achal Singh, General Manager, Division of Corporate Restructuring, Corporation Finance Department, via email at achals@sebi.gov.in or by phone at +91-22-26449619.
Key Entities Referenced
Securities and Exchange Board of India: Regulatory body for securities market in India.
SEBI Share Based Employee Benefit Regulations, 2014: Regulations governing share-based employee benefits in India.
COVID19: The coronavirus disease 2019 pandemic; the context is the relaxation of certain regulations due to the pandemic.
employee stock options: Options granted to employees to purchase company stock.
stock appreciation rights: Rights granted to employees that entitle them to the appreciation in the value of company stock.
Securities and Exchange Board of India Act, 1992: The Act of Parliament that established the Securities and Exchange Board of India.
All Listed Companies: Companies listed on recognized stock exchanges in India.
All Recognized Stock Exchanges: Stock Exchanges recognized by Securities and Exchange Board of India.
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Securities and Exchange Board of India
CIRCULAR
SEBI/HO/CFD/DCR2/CIR/P/2021/576 June 15, 2021
To
All Listed Companies
All Recognized Stock Exchanges
All Registered Merchant Bankers
Dear Sir / Madam,
Sub: Relaxation from the requirement of minimum vesting period in case of death
of employee(s) under SEBI (Share Based Employee Benefit) Regulations, 2014
1. Presently, regulation 18(1) and 24(1) of the SEBI (Share Based Employee Benefit)
Regulations, 2014 (“SBEB Regulations”) provides that there shall be a minimum
vesting period of one year in case of employee stock options (“options”) and stock
appreciation rights (“SAR”).
2. Further, regulation 9(4) of the SBEB Regulations states that in the event of death
of the employee while in employment, all the options, SAR or any other benefit
granted to him/her under a scheme till such date shall vest in the legal heirs or
nominees of the deceased employee.
3. In view of the COVID-19 pandemic situation, to provide relief to the families of the
deceased employees of listed companies, it has been decided as under:
a. the provisions under the SBEB Regulations relating to minimum vesting
period of one year shall not apply in case of death (for any reason) of an
employee and in such instances all the options, SAR or any other benefit
granted to such employee(s) shall vest with his/her legal heir or nominee on
the date of death of the employee; and
b. this relaxation shall be available to all such employees who have deceased
on or after April 01, 2020.
4. This Circular is issued in exercise of powers conferred by Section 11(1) of the
Securities and Exchange Board of India Act, 1992.
5. A copy of this circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework/ Circulars.”
Yours faithfully,
Achal Singh
General Manager
Division of Corporate Restructuring
Corporation Finance Department
Email id: achals@sebi.gov.in
Phone : +91-22-26449619
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