In recent years, Employee Stock Option Plans (ESOPs) have become an increasingly common element of employee remuneration structures in India. The settlement of ESOPs may occur through a fresh issuance of shares by the sponsoring company to the employees or be facilitated through an Employee Benefit Trust (EBT) structure. Ind AS 102, Share-based payment, does not prescribe an explicit approach for the accounting of EBTs in the separate financial statements of the sponsoring company. Accordingly, entities are required to apply judgement to determine an appropriate accounting policy based on specific rights and obligations embedded in the arrangement. In the consolidated financial statements, the focus shifts to whether the sponsoring company has control over the EBT based on principles outlined in Ind AS 110, Consolidated Financial Statements. Therefore, apart from the need for thorough technical analysis, the accounting treatment also calls for careful documentation, consistent application and transparent disclosure of significant judgements, to enable better understanding of the financial statements. This edition of the Accounting and Auditing Update (AAU) examines key accounting considerations that arise when EBTs are used to administer ESOPs.
The Securities and Exchange Board of India (SEBI) introduced a series of amendments to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations). Regulation 30 governs the disclosure of material events and information by listed entities, which represents a significant step towards strengthening market transparency and investor confidence. This edition of the AAU focuses on this amendment and examines its impact through an analysis of Regulation 30 filings made by the top 25 companies from the NIFTY 50 entities. The article analyses the trend in the number of disclosures as well as the nature of disclosures, providing insights into how disclosure practices are evolving in response to regulatory changes.
During the month, a number of regulatory updates were notified by various regulatory bodies. SEBI’s amendments to SEBI (Issue of Capital and Disclosure Requirements) Regulations (ICDR Regulations) strengthen the abridged prospectus framework, including the introduction of a draft abridged prospectus and the use of Quick Response (QR) codes or links for digital access to key offer documents. SEBI also issued an updated Master Circular for mutual funds aligned with the Mutual Funds Regulations, 2026. The Institute of Chartered Accountants of India (ICAI) has issued a number of publications such as educational materials on Ind AS 36, Impairment of Assets and Ind AS 24, Related party disclosures, guidance note on audit of banks, and compendium of Information Systems Audit Standards. The educational materials cover frequently asked questions on key accounting aspects and practical challenges on application of the respective standards while the guidance note and compendium serve as useful reference points for auditors in application of the relevant auditing standards. We have also covered other key updates issued during the month by various regulators and the Government of India in the regulatory section of the AAU.
We would be delighted to receive feedback or suggestions from you on the topics we should cover in the forthcoming editions of the AAU.
For more information on this update, please write to aaupdate@kpmg.com.
