Relaxation from the requirement of minimum vesting period in case of death of employee(s) under SEBI (Share Based EmployeeBenefit) Regulations, 2014

Last updated: 16 June 2021

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The Securities and Exchange Board of India (SEBI) has introduced a relaxation regarding the minimum vesting period for employee benefits. In the event of an employee's death, the one-year minimum vesting period for stock options and stock appreciation rights will no longer apply. This means all benefits granted to the employee will vest immediately with their legal heirs or nominees on the date of death. This change is effective for employees who passed away on or after April 1, 2020, and aims to provide relief to families during the COVID-19 pandemic.

CIRCULAR

SEBI/HO/CFD/DCR2/CIR/P/2021/576

June 15, 2021

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 EmployeeBenefit) 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 vestingperiod 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/herunder 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 employeesof listed companies, ithas 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

FAQ :

The circular relaxes the requirement of a minimum one-year vesting period for employee stock options and stock appreciation rights in cases where an employee passes away.

If an employee dies, all granted options, SARs, or other benefits will vest with their legal heirs or nominees on the date of the employee's death.

This relaxation is available to employees who have deceased on or after April 1, 2020.

The circular provides relaxation from regulations 18(1) and 24(1) of the SEBI (Share Based Employee Benefit) Regulations, 2014.

The benefits will vest with the legal heirs or nominees of the deceased employee.

Notification No : SEBI/HO/CFD/DCR2/CIR/P/2021/576
Source : https://www.sebi.gov.in/legal/circulars/jun-2021/relaxation-from-the-requirement-of-minimum-vesting-period-in-case-of-death-of-employee-s-under-sebi-share-based-employee-benefit-regulations-2014_50545.html

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