Tuesday, October 6, 2015

Issue of shares under Employees Stock Options Scheme / sweat equity shares to persons resident outside India

An Indian company can issue shares under ESOP Scheme and/or sweat equity shares to its employees  who are resident outside India, directly or through a Trust, provided that the face value of which does not exceed 5% of the paid up capital of the issuing company. This would be subject to the following conditions: 
  1. The scheme has been drawn either under the SEBI Act, 1992 or the Companies (Share Capital and Debentures) Rules, 2014.
  2. Such shares issued to non-resident employees/directors are in compliance with the sectoral cap.
  3. Issue of such shares in a company where foreign investment is under the approval route shall require prior approval of the Foreign Investment Promotion Board (FIPB).
  4. Issue of such shares to an employee/director who is a citizen of Bangladesh/Pakistan shall require prior approval of the FIPB.
The issuing company shall furnish Form-ESOP to the RBI, within 30 days from the date of issue.

Based on RBI Circular dt 16/07/15. Please visit www.rbi.org.in for any further clarification if required…..Poppy