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Sebi (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999


2. Definitions

2.1 In these Guidelines, unless otherwise defined,-

 

(1) "employee" means-

 

(a) a permanent employee of the company working in India or out of India; or

 

(b) a director of the company; whether a whole time director or not; or

 

(c) an employee as defined in sub-clause (a) or (b) of a subsidiary, in India or out of India, or of a holding company of the company;

 

(2) "employee compensation" means the total cost incurred by the company towards employee compensation including basic salary, dearness allowance, other allowances, bonus and commissions including the value of all perquisites provided, but does not include:

 

(a) the fair value of the option granted under an Employee Stock Option Scheme; and

 

(b) the discount at which shares are issued under an Employee Stock Purchase Scheme;

 

(3) "employee stock option scheme (ESOS)" means a scheme under which a company grants option to employees;

 

(4) "employee stock purchase scheme (ESPS)" means a scheme under which the company offers shares to employees as part of a public issue or otherwise;

 

(5) "exercise" means making of an application by the employee to the company for issue of shares against option vested in him in pursuance of the ESOS;

 

(6) "exercise period" means the time period after vesting within which the employee should exercise his right to apply for shares against the option vested in him in pursuance of the ESOS;

 

(7) "exercise price" means the price payable by the employee for exercising the option granted to him in pursuance of ESOS;

 

(8) "grant" means issue of option to employees under ESOS;

 

(9) "independent director" means a director of the company, not being a whole time director and who is neither a promoter nor belongs to the promoter group;

 

(10) "market price" of a share on a given date means the closing price of the shares on that date on the stock exchange on which the shares of the company are listed.

 

Explanation : If the shares are listed on more than one stock exchange, but quoted only on one stock exchange on the given date, then the price on that stock exchange should be considered. If the share price is quoted on more than one stock exchange, then the stock exchange where there is highest trading volume on that date should be considered. If share price is not quoted on the given date, then the share price on the next trading day should be considered;

 

(11) "option" means a right but not an obligation granted to an employee in pursuance of ESOS to apply for shares of the company at a pre-determined price.

 

(12) "promoter" means-

 

(a) the person or persons who are in over-all control of the company;

 

(b) the person or persons who are instrumental in the formation of the company or programme pursuant to which the shares were offered to the public;

 

(c) the person or persons named in the offer documents as promoter(s):

 

PROVIDED that a director or officer of the company, if they are acting as such only in their professional capacity will not be deemed to be a promoter.

 

Explanation: Where a promoter of a company is a body corporate, the promoters of that body corporate shall also be deemed to be promoters of the company;

 

(13) "promoter group" means-

 

(a) an immediate relative of the promoter (i.e. spouse of that person, or any parent, brother, sister or child of the person or of the spouse);

 

(b) persons whose shareholding is aggregated for the purpose of disclosing in the offer document "shareholding of the promoter group".

 

(14) "share" means equity shares and securities convertible into equity shares and shall include American Depository Receipts (ADRs), Global Depository Receipts (GDRs) or other depository receipts representing underlying equity shares or securities convertible into equity shares.

 

(15) "vesting" means the process by which the employee is given the right to apply for shares of the company against the option granted to him in pursuance of ESOS.

 

(16) "vesting period" means the period during which the vesting of the option granted to the employee in pursuance of ESOS takes place.

 

2.2 All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Securities and Exchange Board of India Act, 1992 or the Securities Contracts (Regulation) Act, 1956 or the Companies Act, 1956, SEBI (Disclosure and Investor Protection) Guidelines, or any statutory modification or re-enactment thereof, as the case may be.

 

3.1 These Guidelines shall apply to any company whose shares are listed on any recognized stock exchange in India.



Sebi (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 Back




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