Prior to the recent amendment of the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 (“NDI Rules”) on April 12, 2022, the NDI Rules only recognized ESOPs and SES. However, through the amendment dated April 12, 2022 (“NDI Amendment”), the inclusion of the broad definition of “Share Based Employee Benefits” paves way for SAR as an incentive scheme as well. Having said that, it is noteworthy that under the said definition of “Share Based Employee Benefits”, issuance of equity instruments by Indian companies pursuant to share based employee benefits includes issuance to only:
(ii) directors; or
(iii) employees or directors of the holding company or JVs or wholly owned overseas subsidiary(ies), resident outside India.