SEBI Moves ESOP and Sweat Equity Pricing to a Registered Valuer
A December 2025 amendment to the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 replaces the merchant banker this practice's own ESOP and sweat equity pieces described as the trigger's professional with an independent registered valuer, aligning the Regulations' own definition of 'valuer' with Section 247 of the Companies Act.
The Mechanism This Replaces
Both ESOP Fair Valuation: Four Triggers, Four Different Rules and Sweat Equity Valuation: Where Company Law Actually Doubles Up described the SEBI-scheme trigger for listed companies as running through the same merchant-banker mechanism as the income-tax trigger, not a registered valuer of either vintage. That was the accurate position for a listed company's ESOP and sweat equity pricing under the Regulations as they stood.
What the Amendment Actually Does
The December 2025 amendment moves ESOP and sweat equity valuations under the SEBI Regulations from merchant bankers to independent registered valuers, and does it by rewriting the Regulations' own definition of "valuer" to align with Section 247 of the Companies Act, 2013, rather than by amending the pricing mechanism itself. Merchant bankers already engaged on a scheme were given a nine-month transition window, limited to completing work already in progress rather than taking on anything new.
One Instance of the Terminology Drift, Closed
This closes one specific case of a naming inconsistency that has run through several statutes at once: SEBI's own "valuer" now points unambiguously to the Section 247 credential for this particular trigger, the same anchoring already present in the SEBI (ICDR) Regulations' own definitions clause. It does not touch the corresponding income-tax trigger, which still runs through Rule 3(8)'s merchant-banker requirement, or company law's own silence on ESOP pricing. The same instrument, priced under four different tracks, now has three different answers to who does the work instead of four.
What This Means in Practice
A listed company running an ESOP or sweat equity scheme under the SEBI Regulations now needs an independent registered valuer, not a merchant banker, for that specific trigger, effective at the end of the nine-month transition window for engagements already underway. Unlisted companies and the income-tax trigger are unaffected. The comparison table in both of this practice's earlier pieces on the topic should be read as describing the position before this amendment, not the current one.