THE GAZETTE OF INDIA

regulations · 1992 · State unknown

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Parent: THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 (7c4c1f5343adab106c3a94cafc08a5ecf5957ae7)

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THE GAZETTE OF INDIA EXTRAORDINARY PART III – SECTION 4 PUBLISHED BY AUTHORITY SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 13 th August, 2021 SECURITIES AND EXCHANGE BOARD OF INDIA (SHARE BASED EMPLOYEE BENEFITS AND SWEAT EQUITY) REGULATIONS, 2021 No. SEBI/LAD-NRO/GN/2021/40.—In exercise of the powers conferred by sections 11, 11A and 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with sections 54 and 62 of the Companies Act, 2013 (18 of 2013) and rules 8 and 12 of the Companies (Share Capital and Debentures) Rules, 2014, to provide for regulation of sweat equity shares and all schemes by companies for the benefit of their employees involving dealing in shares, directly or indirectly, with a view to facilitate smooth operation of such schemes while preventing any possible manipulation and matters connected therewith or incidental thereto, the Securities and Exchange Board of India hereby makes the following regulations, namely: – CHAPTER I PRELIMINARY 1. Short title, commencement and application. 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 bene

Rule TOC

1 · Short title, commencement and application.

2 · Definitions.

1 · [ww. "valuer" shall have the same meaning as assigned to it under section 247 of the Companies Act, 2013 (18 of 2013) as amended from time to time;]

3 · Implementation of schemes through trust.

1 · Substituted by the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Second Amendment) Regulations, 2025 w.e.f. 02.01.2026. Prior to the substitution, clause (ww) read as under:

4 · Eligibility.

5 · Compensation committee.

6 · Shareholders' approval.

7 · Variation of terms of the schemes.

8 · Winding up of the schemes.

9 · Non-transferability.

2 · [9A. Employee identified as promoter or part of the promoter group in the draft offer document.

10 · Listing.

11 · Schemes implemented by unlisted companies.

12 · Compliances and conditions.

2 · Inserted by the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Amendment) Regulations, 2025 w.e.f. 08.09.2025.

13 · Certificate from auditors.

14 · Disclosures.

15 · Accounting policies.

16 · Administration and implementation.

17 · Pricing.

18 · Vesting period.

19 · Rights of the option holder.

20 · Consequence of failure to exercise an option.

21 · Administration and implementation.

22 · Pricing and lock-in.

23 · Administration and implementation.

24 · Vesting.

25 · Rights of the SAR holder.

26 · Administration and implementation.

28 · Applicability

29 · Definition of employee in relation to issue of sweat equity shares:

30 · Issue of sweat equity shares to employees.

27 · Administration and implementation.

31 · Maximum quantum of sweat equity shares

32 · Special resolution.

33 · Pricing of sweat equity shares.

34 · Valuation.

4 · [Provided that a merchant banker shall complete the ongoing valuation assignment which has been undertaken prior to the coming into force of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Amendment) Regulations, 2025 within a period of nine months from the date of coming into force of the said regulations.]

5 · [***]

6 · [***]

35 · Accounting treatment.

36 · Placing of auditor’s certificate before annual general meeting.

3 · Substituted by the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Second Amendment) Regulations, 2025 w.e.f. 02.01.2026 for the words and symbol "a merchant banker.".

4 · Inserted by the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Second Amendment) Regulations, 2025 w.e.f. 02.01.2026.

5 · Omitted by the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Second Amendment) Regulations, 2025 w.e.f. 02.01.2026. Prior to the omission, sub-regulation (2) read as under:

6 · Omitted by the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Second Amendment) Regulations, 2025 w.e.f. 02.01.2026. Prior to the omission, sub-regulation (3) read as under:

37 · Ceiling on managerial remuneration.

38 · Lock-in of sweat equity shares.

39 · Listing.

40 · Applicability of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

41 · Obligations of the company.

42 · Exemption from enforcement of the regulations in special cases.

43 · Exemption from enforcement of the regulations in other cases.

44 · Directions by the Board.

45 · Power to remove difficulties.

46 · Repeals and savings.

1 · Authorized Share Capital of the Company.

2 · Issued Share Capital of the Company as on date of Institution of the scheme/ amendment of the scheme.

3 · Date of institution of the scheme/ amendment of the scheme.

4 · Validity period of the scheme.

5 · Date of notice of AGM/EGM for approving the scheme/for amending the scheme/for approving grants under regulation 6(3) of these regulations.

6 · Date of AGM/EGM approving the scheme/amending the scheme/approving grants under regulation 6(3) of these regulations.

7 · Kinds of benefit granted under the scheme.

8 · Identity of classes of persons eligible under the scheme:

9 · Total number of shares reserved under the scheme, as applicable.

10 · Number of shares entitled under the grant.

11 · Total number of grants to be made.

12 · Maximum number of shares, options, SARs or benefits to be granted per employee per grant and in aggregate.

13 · Exercise price or pricing formula.

14 · Whether any amount is payable at the time of grant? If so, quantum of such amount.

15 · Lock-in period under the scheme.

16 · Vesting period under the scheme.

17 · Maximum period within which the grant shall be vested.

18 · Exercise period under the scheme.

19 · Whether employee can exercise all the options or SARs vested at one time? Yes/No

20 · Whether employee can exercise vested options or SARs at various points of time within the exercise period? Yes/No

21 · Whether scheme provides for the procedure for making a fair and reasonable adjustment to the number of options or SARs and to the exercise price in case of rights issues, bonus issues and other corporate actions? Clause in scheme describing such adjustment.

22 · Description of the appraisal process for determining the eligibility of employees under the scheme.

23 · The specified time period within which vested options or SARs are to be exercised in the event of termination or resignation of an employee.

24 · The specified time period within which options or SARs to be exercised in the event of death of the employee.

25 · Whether the scheme provides for conditions under which options, SARs, or benefits vested in employees may lapse in case of termination of employment for misconduct? Clause in Scheme describing such adjustment.

26 · Whether scheme provides for conditions for the grant, vesting and exercise of options, SARs or benefits in case of employees who are on long leave? Clause in scheme describing such adjustment.

27 · Whether amount paid/payable by the employee at the time of the grant, vesting or exercise of the options, SARs or benefits will be forfeited if the employee does not exercise the same within the exercise period? Clause in scheme describing such adjustment.

28 · Details of approval of shareholders pursuant to regulation 6(3) of these regulations with respect to:

29 · Details of the variation made to the scheme along with the rationale therefor and the details of the employees who are beneficiary of such variation:

1 · Copy of scheme, certified by the Company Secretary.

2 · Copy of notice of AGM/EGM approving the scheme/for amending the scheme/for approving grants under regulation 6(3) of these regulations certified by the Company Secretary.

3 · Copy of resolution of shareholders for approving the scheme/ for amending the scheme/for approving grants under regulation 6(3) of these regulations certified by the Company Secretary.

4 · List of Promoters as defined under these regulations.

5 · Copy of latest Annual Report.

6 · Certificate of Secretarial Auditor on compliance with these regulations.

7 · Specimen copy of share certificate, if applicable.

8 · Any other relevant documents.

1 · To file, a post-effective amendment to this statement to include any material information with respect to the scheme of distribution not previously disclosed in the statement or any material change to such information in the statement.

2 · To notify, the concerned recognised stock exchanges on which the shares of the company are listed, of each issue of shares pursuant to the exercise of options or SARs under the scheme mentioned in this statement, in the specified form, as amended from time to time.

3 · That the company shall conform to the accounting policies specified in regulation 15 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, [2021]

4 · That the scheme confirms to the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, [2021]

5 · That the company has in place systems / codes / procedures to comply with the Securities and Exchange Board of India (Insider Trading) Regulations, 2015 or any modification or re- enactment thereto.

1 · Business of the company: A description of the main objects and present business of the company.

2 · Abridged financial information: Abridged financial information, for the last five years for which audited financial information is available, as specified by the Board from time to time. The last audited accounts of the company shall also be provided unless this has already been provided to the employee in connection with a previous option or SAR grant or otherwise.

3 · Risk Factors: Management perception of the risk factors for the company (i.e., sensitivity to foreign exchange rate fluctuations, difficulty in availability of raw materials or in marketing of products, cost/time overrun etc.).

4 · Continuing disclosure requirement: The option or SAR grantee shall be provided copies of all documents that are sent to the members of the company. This shall include the annual accounts of the company as well as notices of meetings and the accompanying explanatory statements.