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Saturday, Jul 25, 2009
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Business Daily from THE HINDU group of publications Saturday, Jul 25, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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ESOPs Markets - Regulatory Bodies & Rulings
Directors, officers and staff who buy or sell co shares cannot do opposite transaction for six months Brokers cannot create email IDs for electronic contact notes Our Bureau Mumbai, July 24 Employee stock options will be exempt from SEBI’s amendments made last November to the insider trading regulations, the markets regulator has clarified. SEBI had amended certain provisions of the Prohibition of Insider Trading Regulations in November last year. The marker regulator clarified that as the amendments were for secondary market transactions, Employee Stock Ownership Plans (ESOPs) will not be included. But once ESOP shares are sold in the market, there would be a six-month restriction on buying the shares, SEBI said in a news release on Friday. If the employee has purchased shares on two dates, the holding period would apply from the date of the last sale. One of the main amendments was that a company’s directors, officers and employees “who buy or sell any number of shares of the company shall not enter into an opposite transaction during the next six months.” SEBI also clarified that these entities can sell those shares (if it’s permitted by the company), which they had purchased before the amendments to the Regulations, that is, before November 19, 2008. To prevent the misuse of the running account authorisation given by investors to their brokers, SEBI has brought out a proposed policy on client registration and trading operations. Client RegistrationThese accounts should be dated and contain a clause that settlement of funds and securities should be done by both parties on the last day of every month, SEBI said. Investors will also be able to get their running account authorisation to their brokers revoked at any time, according to the proposals. The running account authorisation gives the broker the right to retain investors’ funds and securities; the funds and securities are supposed to be utilised for meeting the settlement and margin obligations of the clients. But sometimes the funds and securities of the clients (investors) lying with the brokers are prone to several risks, and SEBI has received many complaints in this respect. Exceptions have been provided for if the clients have outstanding transactions or positions in the cash or derivative segment on the running account settlement date. On the matter of electronic contact notes (which are electronic notes confirming trades made by investors), the SEBI proposals state that the practice of creation of email IDs by brokers may be discontinued. The authorisation for receiving ECN should be signed by the client and not by any authorised entity or attorney holder, SEBI has proposed. Re-jigging ESOPs for the FBT era Disclosure document mandatory for ESOP optees, says SEBI More Stories on : ESOPs | Regulatory Bodies & Rulings
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