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OVERVIEW ON RESTRICTED STOCK UNIT-(RSU)

Friday, September 8

Restricted Stock Unit (RSU’s) are a commitment to give the value of a specific number of the Company’s shares in the future for which payment is not usually required. Generally, certain conditions, such as vesting, minimum years of employment, must occur before the holder of RSU’s can receive the promised value. Settlement of RSU’s can occur in stock or the equivalent cash value of the Company’s stock. If an RSU recipient receives the shares, they become the shareholder of the Company. RSU are not stock. They are not restricted stock. They are not stock options. RSU’s are a Company’s promise to give shares of the Company’s stock or the cash value of the Company’s stock to the employees. ESOP is a right offered by a Company to its employees to take equity shares of the Company at discounted price whereas under RSU, employee is awarded with the shares subject to fulfillment of certain conditions. There are two routes of implementing such schemes: 1.Direct Route- Under this route, option is given to the employee and on exercise of option shares are issued directly to the employee. 2.Trust Route- Under the trust route, the Company grants loan to the employee welfare trust for the payment of subscription money and shares are directly issued/transferred to the trust. Over a period of time, options are issued by the Company to the employee and on exercise of options the shares are transferred from the Trust/pool to the employee. Regulatory Framework: 1.Section 67 read with Rule 16 of the Companies (Share Capital and Debenture) Rules, 2014 2.Section 62 read with Rule 12 of the Companies (Share Capital and Debenture) Rules, 2014 3.Income Tax Act, 1961 4.SEBI (Share based Employee Benefits) regulations, 2014 5.SEBI (Listing and Disclosure Requirements) Regulations, 2015 6.Foreign Exchange Management Act, 1999 Such benefits are taxable in the hands of the employee and are treated as employee compensation cost in the P & L of the Companies.

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