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October 2015
SEBI's recent FAQ on unappropriated inventory of shares under SEBI (Share Based Employee Benefits) Regulations, 2014
1. Backgroud
1.1 SEBI has issued clarification in the nature of Frequently Asked Question ("FAQ") on October 21, 2015 on ways available for appropriation of unappropriated shares acquired through secondary acquisition ("Secondary Shares") in terms of proviso to Regulation 3(12) of SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations").

1.2 SBEB Regulations were notified on October 28, 2014 with a view to regulate listed Companies' share based incentive Schemes namely Employee Stock Option Scheme ("ESOS"), Employee Stock Purchase Scheme ("ESPS"), Stock Appreciation Right ("SAR") Scheme, General Employee Benefit Scheme ("GEBS"), and Retirement Benefit Scheme ("RBS") (hereinafter collectively referred to as "Schemes"). Apart from regulation of the Schemes, it also sought to regulate the Trust set-up for implementation of these Schemes envisaging primary and/or Secondary Shares. SBEB Regulations contain a host of provisions prescribing limitations, restrictions, compliances and disclosure requirements especially when a Trust holds, transacts or deals in Secondary Shares.

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