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    Employees for the purpose of ESOP

    Posted By : Abhishek Mishra / Published on : 12-Apr-2023 05:38 AM / View : 281 / Comment : 1

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    Hello all,

    Does MD or ED of the company related to promoter group, fall under the
    definition of employees for the purpose of ESOP?
    Read more on : esop purpose employees

    • As per the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, the term "employee" includes a permanent employee of the company who has been working in India or outside India, for at least one year. The regulations also include "director" within the definition of employee, subject to the following conditions:

      1. The director should be a whole-time director or a non-executive director.

      2. The director should not be a promoter or a person belonging to the promoter group of the company.

      Therefore, if a Managing Director (MD) or Executive Director (ED) of a company is not a promoter or a person belonging to the promoter group of the company, and satisfies the other conditions mentioned in the definition of "employee", then they can be considered as an employee for the purpose of ESOPs.

      However, if the MD or ED is a promoter or belongs to the promoter group of the company, they would not be considered as an employee for the purpose of ESOPs.

      12-04-2023 / 09:20:26 AM
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