Employee stock option scheme and employee stock purchase scheme guidelines 1999


By appreciating the concerns that have a direct bearing on the Capital Market and at the public at large, SEBI has allowed Trusts employee stock option scheme and employee stock purchase scheme guidelines 1999 hold the Securities acquired prior to 17th January, beyond the date specified for alignment of the schemes provided that the schemes have been aligned with SEBI ESOS and ESPS Guidelines and such securities are used only in accordance with such aligned schemes. Further, the 2nd option may raise various concerns related to accounting aspect for the substantial loss or gain that may arise on account of bulk selling of the shares by the Trusts. Likewise, for the 2nd option, i. From all the above, it is very clear that the aforesaid practices are not in line with the intents of the law makers as the Employee Welfare Trusts are being used as portfolio managers for the Promoters, which, for obvious reasons, is a non acceptable proposition.

How the Companies proposed to deal with the said shares held by the Employee Welfare Trusts after the Circular dated 17th January, Likewise, for the 2nd option, i. Further, the 2nd option may raise various concerns related to accounting aspect for the substantial loss or gain that may arise on account of bulk selling of the shares by the Trusts.

Phantom Stocks unique blend of Employee appreciation, with no Equity dilution. Further, the 2nd option may raise various concerns related to accounting aspect for the substantial loss or gain that may arise on account of bulk selling of the shares by the Trusts. In this regard, upon receipt of various representations seeking clarification on the applicability of the Circular and for extension of time period for dilution of shareholding by the Trusts, SEBI has further come out with the subsequent amendment in order to address various ambiguities for dilution of shareholding by the Trusts and its impact on the Capital Market. Under ESOPs, the options based upon the eligibility criteria of the Employees, are issued to them, which an employee after the expiry of the specified period, can convert them into the equity shares of the company and participate in the ownership of the company employee stock option scheme and employee stock purchase scheme guidelines 1999 with the other shareholders. Further some companies also use TRUST to provide the finance facility to the employees in case at the time of exercise of options, they require fund to make the payments for the options.

Under the Direct Routeas the name suggests, fresh allotments of the Equity shares of the company are made to employees, as and when they exercise the options. SEBI has further mandated the Listed Entities to disclose further details related employee stock option scheme and employee stock purchase scheme guidelines 1999 the Schemes to the Stock Exchanges by June 30, and in order to keep an eye on the listed entities, has further casted a responsibility on the listed entities to submit details related to allotments made or options granted post 17th January, and up to 31st December, within 7 days from the end of the quarter. For instance, if a Company goes in for option 1, i.

SEBI has further mandated the Listed Entities to disclose further details related to the Schemes to the Stock Exchanges by June 30, and in order to keep an eye on the listed entities, has further casted a responsibility on the listed entities to submit details related to allotments made or options granted post 17th January, and up to employee stock option scheme and employee stock purchase scheme guidelines 1999 December, within 7 days from the end of the quarter. With the intent to bring transparency in the operations of the Trusts formulated for extending Welfare Benefits to the Employees, SEBI vide its Circular dated 17th January, restricted the Employee Welfare Trusts to buy shares from the secondary market and to dilute their existing holding by 30th June, Likewise, for the 2nd option, i.

With the objective of aligning the existing Employee Welfare Schemes and working of the Employees Welfare Trusts, SEBI itself, vide the said Circular, had prescribed the following two modes for diluting the shareholding acquired by the said Employees Welfare Trusts from the Secondary Market by 30th June, Furthermore many of these companies are not showing these Employees Welfare Trust as part of Promoter Group, which again is also a wrong disclosure as per the SEBI disclosure norms. SEBI vide its Circular dated 14th May, employee stock option scheme and employee stock purchase scheme guidelines 1999 addressed various representations seeking clarification on the applicability of the Circular dated 17th January, and the shortcomings in the modes suggested for dilution of shareholding by the Trusts.