Taking into account the wider perspective of Employee Benefit Schemes in India as well as overseas and with the intent to align the provisions of the extant regulations with the Companies Act, 2013, the Market Regulator, SEBI has floated new Regulatory framework governing the regime of Employee Welfare Programmes. These new Regulations have been named SEBI (Share Based Employee Benefit Schemes) Regulations, 2014.

This move of SEBI is a welcoming step that aims at streamlining the regulatory framework with the dynamic business environment thereby ensuring transparency in the operations of the Employee Welfare Trusts on one hand and bringing all Welfare Schemes involving Shares of the Listed Entities under the regulatory arena.

SEBI, through the new Regulations, has brought an end to the ongoing dilemma as to allowance / disallowance of secondary market purchases for ESOPs. SEBI has allowed secondary market acquisitions by the Employee Welfare Trusts subject to compliance of certain conditions.

Main highlights of the new Regulations are outlined as follows:

• Guidelines have now been changed to Regulations, thus giving them a stricter enforceability;
• The Regulations have broadened horizons for rewarding Employees without resulting in dilution of existing capital base of the Listed entities by allowing Trust Route.
• The arena of applicability of the regulations has been widened, now all Employee Benefit Schemes involving Shares of the Company, including General Employee Benefit Schemes (GEBS) and Retirement Benefit Schemes (RBS)alongwith ESOS & ESPS, will be governed by the  Regulations now;
• For the first time, Stock Appreciation Rights (SARs), a worldwide remuneration mode, have been recognized under the Indian laws and have been brought under the ambit of SEBI Regulations;
• The provisions of these regulations shall also apply to any Scheme set up, funded or controlled by a listed company, on any Stock Exchange in India or any of its group company;