The trust may hold the shares acquired from secondary market for a minimum period of six months.

However, within the said holding period of six months the trust may be allowed to tender shares in open offers/buybacks/delisting offers or any other exit offered by the company to its shareholders.

No off-market transfer may be permitted except to employees pursuant to the scheme, the market regulator said.

To ensure “independence of trustees and create an arm’s length relationship” in the operation of trust, SEBI suggested that a person shall not be appointed as a trustee to hold the shares if he is a director, key managerial personnel or promoter of the company or the beneficiary holding ten per cent or more of the paid-up share capital of the company.

Those companies which have already acquired shares from secondary market in excess of maximum permissible limits could be given a longer time period of 5 years from the date of notification to come down to the permissible level.

For general employee benefit and retirement benefit schemes holding more than the prescribed limit is proposed to be given more than five years period from the date of notification to reduce the same to the permissible level.

SEBI has also proposed to extend the timeline for alignment of existing employee benefit schemes with the ESOP guidelines till June 30, this year.