Market regulator Securities and Exchange Board of India (Sebi) today amended the employee stock option scheme (Esop) regulations to prohibit listed entities from framing any employee benefit schemes, involving acquisition of own securities from the secondary market.
The move is to prevent companies from dealing in its own securities, through such schemes, with the objective of manipulating its share price. “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,” Sebi said in a circular. Sebi has said companies, which have already framed and implemented schemes involving dealing in the securities of the firm will have to inform the exchanges within a month.