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:
- The scheme has been drawn either under the SEBI Act, 1992 or the Companies (Share Capital and Debentures) Rules, 2014.
- Such shares issued to non-resident employees/directors are in compliance with the sectoral cap.
- 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).
- 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
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