Amendments to SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 and Equity Listing Agreement
To
All
Stock Exchanges
All
Registered Merchant Bankers
1.
SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 ("SEBI (ESOS & ESPS) Guidelines") were issued to
enable listed entities to reward their employees through stock option schemes
and stock purchase schemes and to ensure that such schemes introduced by the
companies are within the regulated framework.
2.
It has come to the notice of SEBI that some listed entities have been framing
their own employees benefit schemes wherein Trusts have been set up to deal in
their own securities in the secondary market, which was not envisaged within
the purview of SEBI (ESOS and ESPS) Guidelines 1999.
3.
It is apprehended that some entities may frame such schemes with the purpose of
dealing in its own securities with the object of inflating, depressing,
maintaining or causing fluctuation in the price of the securities by engaging
in fraudulent and unfair trade practices. Such dealing in the company’s shares
by the Trusts may also raise regulatory concerns regarding compliance with SEBI
(Prohibition of Fraudulent and Unfair Trade Practices relating to the
Securities Market) Regulations, 2003 and SEBI (Prohibition of Insider Trading)
Regulations, 1992.
4.
In order to address the concerns over acquisition of shares by employee welfare
Trusts from the secondary market, it has been decided to prohibit the listed
entities from framing any employee benefit schemes involving acquisition of own
securities from the secondary market.
5.
In order to implement the above decision, certain listing conditions are hereby
specified by way of inserting Clause 35C in the Equity Listing Agreement as
given in Annexure I.
6.
In respect of those companies, which have already framed and implemented before
the date of this circular any employee benefit schemes involving dealing in the
securities of the company, which are not in accordance with SEBI (ESOS and
ESPS) Guidelines, it has been decided that:-
(i)
such companies will be required to inform the details of their schemes to the
Stock Exchanges within 30 days from date of this circular, in the format
provided in AnnexureII to this circular and to disseminate the said information on their
website.
(ii)
such companies shall align any existing employee benefit schemes with SEBI
(ESOS and ESPS) Guidelines on or before June 30, 2013.
7.
In view of the above, it has also been decided to amend the SEBI (ESOS and
ESPS) Guidelines 1999 as provided in AnnexureIII. The amendments made vide this circular shall come into force with
immediate effect.
8.
All stock exchanges are advised to ensure compliance with this circular, and carry
out the necessary amendments in their Listing Agreement accordingly.
9.
This circular is being issued in exercise of the powers under Section 11 read
with Section 11A of the Securities and Exchange Board of India Act, 1992.
10.
This circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework” and “Issues and Listing”.
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