SEBI prohibits companies from trade in ESOS, ESPS shares

Market regulator, the Securities and Exchange Board of India (SEBI) has brought changes in its Employee Stock Option Scheme (ESOS) and Employee Stock Purchase Scheme (ESPS) Guidelines, 1999, prohibiting companies from dealing in their own shares in the secondary market under these schemes, with immediate effect.

Why this measure?

It was apprehended that some companies may frame such employee benefit schemes with the purpose of dealing in its own securities with the object of inflating, depressing, maintaining or causing fluctuation in the price of the securities by engaging in fraudulent and unfair trade practices. These sorts of trading also raise regulatory concerns regarding compliance with SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003, and SEBI (Prohibition of Insider Trading) Regulations, 1992.



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