Stock market regulator SEBI has prohibited listed entities from framing any employee benefit schemes involving acquisition of its own shares from the secondary market.
On Thursday, SEBI said this was being done to prevent companies from manipulating their share prices (buying and selling) using trusts that managed their employee benefit schemes.
SEBI has amended the employee stock options (ESOP) and employee stock purchase scheme guidelines and the equity listing agreement. A new clause, 35C, has been added to the equity listing agreement.
SEBI’s circular said this would address apprehensions of price manipulation and insider trading.
Companies with existing employee benefit schemes (before the date of this circular), and not in accordance with the new SEBI (ESOS and ESPS) guidelines, have to inform the details of their scheme to the stock exchanges within 30 days and align their schemes to the new guidelines latest by June 30, 2013.
Companies also have to put the above information on their Web sites, said SEBI.