SEBI issues detailed ESOP disclosure norms

The Securities and Exchange Board of India (SEBI) has come out with detailed disclosure norms for listed firms while exercising employee stock options programmes (ESOP) to address concerns regarding potential market abuse.

  • As per the norms, the compensation committee constituted by companies for ESOP schemes will be required to formulate detailed terms and conditions.
  • In addition, they have to disclose information about the trust, powers and duties of trustee. These disclosures are part of SEBI’s efforts to improve governance and transparency of such schemes.

About SEBI:

The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 12 April 1992 through the SEBI Act, 1992.

Composition:

SEBI is composed of-

  • The chairman who is nominated by Union Government of India.
  • Two members, i.e., Officers from Union Finance Ministry.
  • One member from the Reserve Bank of India.
  • The remaining five members are nominated by Union Government of India, out of them at least three shall be whole-time members.

For the discharge of its functions efficiently, SEBI has been vested with the following powers:

  • To approve by−laws of stock exchanges.
  • To require the stock exchange to amend their by−laws.
  • Inspect the books of accounts and call for periodical returns from recognized stock exchanges.
  • Inspect the books of accounts of financial intermediaries.
  • Compel certain companies to list their shares in one or more stock exchanges.
  • Registration of brokers.

Sources: The Hindu, Wiki.

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