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

5. Compensation Committee

5.1 No ESOS shall be offered unless the company constitutes a Compensation Committee for administration and superintendence of the ESOS.

5.2 The Compensation Committee shall be a Committee of the Board of Directors consisting of a majority of independent directors.

5.3 The Compensation Committee shall, inter alia , formulate the detailed terms and conditions of the ESOS including:-

(a) the quantum of option to be granted under an ESOS per employee and in aggregate;

(b) the conditions under which option vested in employees may lapse in case of termination of employment for misconduct;

(c) the exercise period within which the employee should exercise the option and that option would lapse on failure to exercise the option within the exercise period;

(d) the specified time period within which the employee shall exercise the vested options in the event of termination or resignation of an employee;

(e) the right of an employee to exercise all the options vested in him at one time or at various points of time within the exercise period;

(f) the procedure for making a fair and reasonable adjustment to the number of options and to the exercise price in case of rights issues, bonus issues and other corporate actions;

(g) the grant, vest and exercise of option in case of employees who are on long leave; and

(h) the procedure for cashless exercise of options.

5.4 The Compensation Committee shall frame suitable policies and systems to ensure that there is no violation of:-

(a) Securities and Exchange Board of India (Insider Trading) Regulations,1992; and

(b) Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) regulations, 1995.

by an employee.



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




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