Shivani Thakur
Published on: April 14, 2022, at 11:20 IST
Recently a high-powered committee has recommended amendments to the Companies Act, including allowing the use of restricted stock units (RSUs) and stock appreciation rights.
The committee is hoping to provide companies with more options for remuneration of employees in additional salaries. RSUs give a scheme under which the employee will be entitled to the shares at the end of the vesting period, so long as the restrictions concerning the duration of employment and performance parameters are met.
“if these schemes require the issue of further securities by the company, their issuance must be allowed only after approval of the shareholders through a special resolution,” the panel said.
The committee headed by MCA secretary Rajesh Verma has proposed allowing fractional shares. Industry experts such as Uday Kotak, Shardul Shroff, and Amarjit Chopra were members of the committee.
The report, which was released for public comments, will form the basis for the proposed Bill.
The committee has also proposed restrictions on independent directors from taking up managerial positions in the company or in subsidiaries, and further tightening norms for auditors including penal provisions.