One-year ban on ESOP share sales also covers ex-employees: SEBI
03 August 2012
Employees of a company who have been allotted shares under employee stock options (ESOPS) cannot sell the shares for one year following the IPO even if they have ceased to be employed by the company, the Securities and Exchange Board of India (SEBI) has said.
Replying to an informal guidance sought by the Multi Commodity Exchange (MCX), the market regulator said that even if a person ceases to be an employee of a company on the date of allotment of shares pursuant to the IPO, the shares held by that person have to be locked in for an entire year.
MCX said the query was based on an email from an ex-employee forwarding an email dated 17 April 2012 from SEBI stating that shares allotted under ESOP scheme to an employee are eligible for exemption from lock-in under Regulation 37 of SEBI (ICDR) Regulations, irrespective of the fact that the allottee has ceased to be an employee at the time of listing.
Besides, the employees and ex-employees of Financial Technologies of India Ltd, former promoters of MCX, would also be considered as 'employees' for the purpose of the one-year lock-in provision in the ESOPS.
Consequently, the lock-in provision would apply to shares held by the ex-employees of MCX under its ESOP scheme, as well as to the shares held by the existing and ex-employees of FTIL, SEBI said.
MCX, the countries biggest commodities trading platform, had hit the capital market with its IPO earlier this year.