SEBI Moves ESOP and Sweat Equity Pricing to a Registered Valuer
The same instrument priced under four different tracks has, until now, produced four different answers to who signs the report. A December 2025 amendment to the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 closes one of them. This piece covers what the amendment changes, what it deliberately leaves alone, and which of this practice's earlier pieces now describe a superseded position.
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. It is no longer.
The Amendment Rewrites the Definition, Not the Formula
The change moves ESOP and sweat equity valuations under the SEBI Regulations from merchant bankers to independent registered valuers. It does this 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
SEBI's "valuer" now points unambiguously to the Section 247 credential for this trigger, the same anchoring already present in the SEBI (ICDR) Regulations' own definitions clause.
It reaches nothing else. The income-tax trigger still runs through Rule 3(8)'s merchant-banker requirement, and company law remains silent on ESOP pricing altogether. The same instrument, priced under four 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 should engage an independent registered valuer, not a merchant banker, for that trigger. If a merchant banker is mid-engagement, the nine-month window covers finishing that work and nothing further.
Unlisted companies are unaffected. The income-tax trigger is unaffected. And the comparison tables in this practice's two earlier pieces on the topic should now be read as describing the position before this amendment, not the current one.