Conditions:
The company shall
not make a provision of money for the purchase of, or subscription for, shares
in the company or its holding company, for the purchase of, or the subscription
for, the shares by trustees is for the
shares to be held by or for the benefit
of the employees of the company, unless it complies with the following
conditions, namely:-
(a) The scheme of
provision of money for purchase of or subscription for the shares is approved by
the members by passing special resolution in a general
meeting;
(b) Such purchase of
shares shall be made only through a recognized stock exchange in case
the shares of the company are listed and not by way of private offers or
arrangements;
(c) Where shares of
a company are not listed on a recognized stock exchange, the valuation
at which shares are to be purchased shall be made by a registered
valuer;
(d) The value of
shares to be purchased or subscribed in the aggregate together with the money
provided by the company shall not exceed five percent of the aggregate
of paid up capital and free reserves of the company;
Explanatory
Statement:
The explanatory
statement to be annexed to the notice of the general meeting to be convened
pursuant to section 102 shall, in addition to the particulars mentioned in
sub-rule (1) of rule 18, contain the following particulars, namely:-
(a) The class of
employees for whose benefit the scheme is being implemented and money is being
provided for purchase of or subscription to shares;
(b) The particulars
of the trustee or employees in whose favor such shares are to be
registered;
(c) The particulars
of trust and name, address, occupation and nationality of trustees and their
relationship with the promoters, directors or key managerial personnel, if
any;
(d) The any interest
of key managerial personnel, directors or promoters in such scheme or trust and
effect thereof;
(e) The detailed
particulars of benefits which will accrue to the employees from the
implementation of the scheme;
(f) The details
about who would exercise and how the voting rights in respect of the shares to
be purchased or subscribed under the scheme would be exercised;
Trustee of
Employee Trust:
A person shall not
be appointed as a trustee to hold such shares, if he-
(a) is a director,
key managerial personnel or promoter of the company or its holding, subsidiary
or associate company or any relative of such director, key managerial personnel
or promoter; or
(b) beneficially
holds ten percent or more of the paid-up share capital of the
company.
Voting
Pattern of Employees:
Where the voting
rights are not exercised directly by the employees in respect of shares to which
the scheme relates, the Board of Directors shall, inter alia, disclose in the
Board’s report for the relevant financial year the following details,
namely:-
(a) the names of the
employees who have not exercised the voting rights directly;
(b) the reasons for
not voting directly;
(c) the name of the
person who is exercising such voting rights;
(d) the number of
shares held by or in favour of, such employees and the percentage of such shares
to the total paid up share capital of the company;
(e) the date of the
general meeting in which such voting power was exercised;
(f) the resolutions
on which votes have been cast by persons holding such voting power;
(g) the percentage
of such voting power to the total voting power on each resolution;
(h) whether the
votes were cast in favour of or against the resolution.
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