Tag: ESOPs
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ESOP Shares and the Computation of Open Offer Triggers
Under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”), an acquirer must make a mandatory open offer to acquire the shares of the remaining shareholders when the acquirer acquires shares (with voting rights) beyond prescribed thresholds. Since the triggers are based on the acquisition of shares with voting rights, questions could
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Cashless Employee Stock Option Scheme and Insider Trading Regulations
Last year, the Securities and Exchange Board of India (“SEBI”) issued a guidance note clarifying certain matters regarding employee stock option plans (ESOPs) and their implications under the SEBI (Prohibition of Insider Trading) Regulations, 2015 (the “Insider Trading Regulations”). Specifically, it stated that the “contra-trade” restrictions do not apply to the exercise of stock options
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SEBI’s Guidance Note on Insider Trading Regulations
After the SEBI (Prohibition of Insider Trading) Regulations, 2015 (the “Regulations”) were issued that came into effect on May 15, 2015, SEBI received several requests from companies and their advisors on certain operational issues that came to the fore in the implementation of the Regulations. In order to address those, SEBI issued a Guidance Note
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SEBI Regulations Inapplicable to “Phantom” Stock Schemes
The SEBI (Share Based Employee Benefits) Regulations, 2014 (the “Regulations”) regulate various types of schemes offered by companies to their employees relating to shares. In two separate letters issued pursuant to requests for informal guidance, SEBI has stated that the Regulations are not applicable to phantom stock options and similar schemes that do not involve
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Review of Stock-Related Employee Benefit Schemes
The legal regime pertaining to the grant of employee stock options (ESOPs) and employee share purchases (ESPSs) has been undergoing some change in recent years, particularly for those that are implemented through a trust established by a company for this purpose. In August 2012, SEBI announced its decision requiring all listed companies to frame employee
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Prohibition on Acquisition of Shares by Employee Trusts
One of the decisions taken at SEBI’s board meeting escaped attention until some recent discussion in the financial press (here and here). The relevant paragraph in SEBI’s press release is as follows: Listed entities shall frame employee benefit schemes only in accordance with SEBI (ESOS and ESPS) Guidelines, 1999. Entities whose schemes are not in
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IPO Lock-in on ESOP Shares
SEBI recently issued an informal guidance to clarify that in the case of an IPO only shares held by employees of the company or other qualifying group entities (such as a holding company) are entitled to exemption from the one-year lock-in period on pre-existing share capital. Specifically, employees who are no longer in employment of
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‘Sweat Equity’ vs. ‘Sweet Equity’ – a Legal Perspective
(In the following post, Rohan Bagai analyzes the regulations relating to ‘sweat equity’ under Indian company law in the light of recent events surrounding the Indian Premier League. Rohan is a corporate lawyer at one of the leading law firms in India. He holds a Master of Laws (LL.M.) degree from New York University School
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SEBI informal guidance – ESOP, Insider Trading and independent directors
The SEBI recently issued an informal guidance note on matters relevant to companies which are in the process of devising employee share option plans (ESOPs). A company contemplating an ESOP in accordance with the SEBI (ESOP and ESPS) Guidelines, 1999 wished to form an employee welfare trust to grant options to eligible employees and desired
