SEBI waives One Year Cooling period for vesting Stock Option after death [Read Circular]

SEBI -vesting stock option- Taxscan

The Securities and Exchange Board of India (SEBI) notified the waiver of the One Year Cooling period for vesting stock options after death due to COVID-19 pandemic.

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 vesting period of one year in case of employee stock options and stock appreciation rights (SAR).

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 /her under a  scheme till such date shall vest in the legal heirs or nominees of the deceased employee.

However, the SEBI empowered under Section  11(1)  of the Securities and Exchange Board of India Act, 1992 while keeping in mind the pandemic situation has notified that the provisions under the  SBEB  Regulations relating to a 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.

The relaxation shall be applicable for all such employees who died on or after April 1, 2020.

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