Cos with employee benefit trusts need to re-classify holding

Listed companies having employee benefit trusts will have to re-classify the shareholding of the trusts into 'non-promoter and non-public' category, markets regulator Sebi today said in a notification.
Such trusts would now be required to comply with minimum public shareholding norms within three years under the new Share Based Employee Benefits (SBEB)regulations.
Earlier, these entities had five years time for compliance.
After taking into account representations made by market participants, Sebi has decided to increase the time period for exercise of voting rights by employee benefit trusts from one year to three years.
"Trustees of a trust may continue to vote in respect of shares held by such trust for a period of three years, commencing from October, 28, 2014," Securities and Exchange Board of India (Sebi) said in a notification.

Employees of 'associate company' will not be eligible as beneficiaries of the employee benefit schemes framed under the new Regulations.

This is in line the amendments to the Companies (Share Capital and Debentures) Rules, 2014, made under the Companies Act.
In addition, these trusts would be allowed to offer shares - under the tender offer route -- through the stock exchange platform, without any requirement of minimum holding period. This follows recent amendments made to Sebi regulations on takeover, buy-back and delisting.
The changes to Share Based Employee Benefits norms are being made to align with the new rule under the Securities Contracts (Regulation) Rules, 1957, formulated by the government.