Mumbai: Market regulator SEBI today said
regulations that prohibit employees of a company from selling
his/her firm`s shares if he/she has bought them in the past
six months, or vice versa, do not apply to ESOPs.
"Restriction in Clause 4.2 is intended for transactions
in the secondary market and hence it is not applicable for the
exercise of ESOPs and sale of these shares," the Securities
and Exchange Board of India (SEBI) said in a statement.
The market regulator clarified that the employee can
subscribe to the employee stock option plans (ESOPs) even if
he has sold shares during the previous six months.
Clause 4.2 reads: "All directors/ officers/ designated
employees who buy or sell any number of shares of the company
shall not enter into an opposite transaction i.e. sell or buy
any number of shares during the next six months following the
"All directors/ officers/ designated employees shall also
not take positions in derivative transactions in the shares of
the company at any time.
"In the case of subscription in the primary market
(initial public offers), the above mentioned entities shall
hold their investments for a minimum period of 30 days. The
holding period would commence when the securities are actually