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Issue of shares under Employees Stock Options Scheme and/or sweat equity shares to persons resident outside India
Presently, an Indian Company can issue shares to its employees or employees of its joint venture or wholly owned overseas subsidiary/subsidiaries who are resident outside India, directly or through a Trust under Employees’ Stock Option (ESOP) Scheme, if: –
1. The scheme is drawn under the SEBI Act, 1992; and
2. The face value of the shares to be allotted under the scheme to non-resident employees did not exceed 5% of the paid up capital of the issuing company.
This circular now provides that an Indian company can issue “employees’ stock option” and/or “sweat equity shares” to its employees/directors or employees/directors of its holding company or joint venture or wholly owned overseas subsidiary/subsidiaries who are resident outside India, if: –
1. The scheme has been drawn either under: – (a) The Securities Exchange Board of India Act, 1992; or (b) The Companies (Share Capital and Debentures) Rules, 2014.
2. The “employee’s stock option”/“sweat equity shares” are in compliance with the sectoral cap applicable to the said company.
3. Issue of “employee’s stock option”/“sweat equity shares” in a company where foreign investment is under the approval route will require prior approval of FIPB.
4. Issue of “employee’s stock option”/“sweat equity shares” under the applicable rules/regulations to an employee/director who is a citizen of Bangladesh/ Pakistan will require prior approval of FIPB.
5. The issuing company must furnish a return as per the Form-ESOP (Annexed to this circular) to the concerned Regional Office of RBI within 30 days from the date of issue of employees’ stock option or sweat equity shares.
