Securities Exchange Board of India ("SEBI") in its Board Meeting on 23rd November 2016 has approved the proposal to amend the Listing Regulations to require disclosures and prescribe additional conditions in relation to the compensation agreements that are typically entered into by private equity funds to incentivize promoters, directors and key managerial personnel of listed companies.
The proposed amendments are as follows:
- No employee (including key managerial personnel, director or promoter) of a listed entity shall enter into any agreement for himself or on behalf of any other person, with any shareholder or any other third party with regard to compensation or profit sharing unless prior approval has been obtained from the board as well as public shareholders.
- All such agreements entered during the past 3 years from the date of notification shall be informed to the stock exchanges for public dissemination including those which may not be currently valid.
- Existing agreements entered into prior to the date of notification and which may continue to be valid beyond such date shall be informed to the stock exchanges and approval shall be obtained from public shareholders by way of an ordinary resolution in the forthcoming general meeting.
- Interested persons involved in the transactions shall abstain from voting on the said resolution.
Click the link to access the SEBI press release http://www.sebi.gov.in/cms/sebi_data/pdffiles/35234_t.pdf
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