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Showing posts from January, 2014

Increase in Stamp Duty on Share Certificates and Other Instruments by State of Haryana

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The Haryana State Government in order to curb the malpractices adopted by some of the Corporate holding their Board Meetings in Gurgaon or some other places in Haryana and executing the share certificates (i.e. instruments) over there, thereby evading the stamp duty on share certificates, and also finding the stamp duty on a lower side, has amended the Article 19 of Schedule 1A (as applicable to Haryana) of the Indian Stamp Act, 1899 (“Act”) vide notification dated 1st October 2013 in exercise of the power under Article 246 (3) read with Entry 63 of List II of Seventh Schedule of Constitution of India, and increased the stamp duty levied on the share certificates evidencing the right or title of the holder thereof, or any other person, to the shares in such certificates, equivalent to the stamp duty levied on such share certificates in the National Capital Territory of Delhi.
Mr. Abhishek Bansal
Sr. Associate
+919873191956
abhishek@indiacp.com Further a new clause (d) to Article 5 has be…

A new era of governance for granting ESOP by unlisted entities

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It is a common saying that 'change is always better’, howsoever rigid it seems to be. Till now, there are no specific provisions regulating the regime of Employee Welfare Schemes framed by the unlisted Companies. However, the scenario will change when the Companies Act, 2013 will come into force in its entirety. Specific inclusion of provisions governing the ESOPs in the Companies Act, 2013 will broaden the horizons for rewarding employees thereby removing all the apprehensions faced by the unlisted companies.
Ms. Mohini Varshney
Assistant Vice President
+919971673332
mohini@indiacp.com The draft rules, floated by the Ministry of Corporate Affairs for public comments, prescribe certain pre-requisites that will be required to be taken into consideration while preparing Employee Welfare Schemes by unlisted entities. The main highlights of the draft rules related to Employee Stock Options are outlined as follow:

RBI Updates

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A. Rollover of Guarantee given to JV/WOS incorporated outside India  Reserve Bank of India, vide A. P (DIR Series) Circular No. 83 dated 3rd January, 2014 has amended the Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Amendment) Regulations, 2004] (the Notification), as amended from time to time and has decided to not consider the renewal/rollover of an existing/original guarantee as a fresh financial commitment. Therefore, roll-over of the guarantee shall not be required to be reported as a fresh guarantee. 
Mr. Abhishek Bansal
Sr. Associate
+919873191956
abhishek@indiacp.com For rollover of the existing guarantee shall be subject to the fulfillment of the following conditions:

Changing Contours of Employees for Extending Welfare Benefits

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Over years, the buzzword “employee stock options” has attracted attention not only of corporate sector but also of Regulatory Authorities. Prior to the promulgation of Companies Act, 2013, employee stock option schemes are only been regulated by the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which are applicable only on listed companies. 
Ms. Mohini Varshney
Assistant Vice President
+919971673332
mohini@indiacp.com The said guidelines allows listed companies to give employee stock options to permanent employee of the company working in India or out of India; a director of the company, whether a whole time director or not; permanent employee and director of subsidiary company, in India or out of India, or of a holding company of the company. But since these guidelines are applicable only on listed companies, unlisted companies were assumed to be allowed to give ESOPs to any person who is on the payroll of the company or any group company as an e…

Excluding Non-funded Employee Welfare Trusts out of the ambit of proposed ESOP Regulations is a boon or a bane?

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The basic premise of regulations/guidelines governing stock related employee benefit schemes is to ensure that such schemes are carried out in a fair and transparent manner and they should not be prejudice to the interest of employees, investors and public at large. 
Ms. Mohini Varshney
Assistant Vice President
+919971673332
mohini@indiacp.com With this backdrop, the capital market watchdog SEBI floated Discussion Paper on ‘Review of guidelines governing stock related employee benefit schemes’ thereby proposing to take in its ambit all the Employee Welfare schemes which are set up, managed or financed by the company directly or indirectly through the mechanism of a Trust and which deal in

New Outlook for Employee Welfare Trusts Shareholding in the proposed ESOP & ESPS Regulations

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On November 20, 2013, the capital market regulator, SEBI came out with Discussion Paper on 'Review of guidelines governing stock related employee benefit schemes' with the intent to frame comprehensive ESOP & ESPS Regulations. Primarily, the discussion paper aims to allow secondary market acquisitions by Employee Welfare Trusts in order to align the working of the said Trusts with the internationally accepted practice thereby facilitating the companies to grant options to employees without diluting their existing share capital, something that had been prohibited earlier by the capital market regulator, SEBI vide its Circular dated 17th January, 2013.
Ms. Mohini Varshney
Assistant Vice President
+919971673332
mohini@indiacp.com Till date, there is no specific framework that governs the classification of the Employee Welfare Trusts in the Promoter/ Non-Promoter Category. Therefore, there is no standard practice being followed by the Companies in respect of classification of the…