The Securities & Exchange Board of India came up with a new set of Regulations in 2014 to govern the functioning of Share Based Employee Benefit Schemes. As a result, it repealed the two decade old Guidelines on Employee Stock Option Plans.
In the past few years, Employee Benefit Plans and particularly ESOPs have gained the limelight. This is due to the fact that Employee recognition, welfare & retention have become the prime concern for the Corporates. Taking this into the account, the lawmakers have also made a mark on the regulatory arena with regard to the governance of Share Based Employee Stock Option Plans. Accordingly the Capital Market Regulator has streamlined the legal and regulatory framework and further given the detailed clarifications upon the disclosure requirements under the new Regulations.
DISCLOSURES BY THE BOARD OF DIRECTORS
The details of an Employee Benefit Plan if framed by a Company now forms a mandatory part of its Directors Report. Earlier there was a precise list of disclosures that were required to be made under the Boardâ€™s Report. But now SEBI has prescribed a detailed list of disclosures pursuant to the new Share Based Employee Benefit Regulations, 2014.
Now the Board of Directors, in their report shall disclose any material change in the scheme(s) and whether the scheme(s) is/ are in compliance with the Regulations.