Can any one please advise me whether a Compay can issue stock options to employees after purchasing the shares from market. Relevant material also pl.
6 Replies
Madhusudan Kabra
(knowledge seeker)
(1779 Points)
Replied 16 December 2010
No, A company which has bought back any security cannot make any issue of the same kind of securities in any manner up to six months from the date of completion of buy back.
Regards
M.s.Kabra
K S Kiran
(Computer Software)
(114 Points)
Replied 16 December 2010
Thanks Madhusudan..
whether Stock option Trust of the Company can purchase shares from market and issue shares to employees
Madhusudan Kabra
(knowledge seeker)
(1779 Points)
Replied 16 December 2010
I dnt know the exact provision of this but in my opinion stock option trust is not a seprate legal body ...it is as good as company in view of law. therefore a company can't
Regards
M.s.kabra
Madhusudan Kabra
(knowledge seeker)
(1779 Points)
Replied 16 December 2010
and if trust is a seprate legal body then even company have to issue shares to that trust ....which is also prohibited
A company which has bought back any security cannot make any issue of the same kind of securities in any manner up to six months from the date of completion of buy back.
REGARDS
M.s.kabra
K S Kiran
(Computer Software)
(114 Points)
Replied 16 December 2010
Yes. Trust is a separate body.
But trust can purchase shares from open market and grant in the form of stock options to employees.
Madhusudan Kabra
(knowledge seeker)
(1779 Points)
Replied 16 December 2010
In my opinion trust is not a seprate legal body because it is not ment for any economic benefite at all and which has no seprate set of book of A/c
(i am not very much sure on this whether seprate books of a/c's are maintained or not. AS-21 declines consolidation of accounts of a governing body such as gratuity trust, Esop trust however guidline issued by SEBI requires to consolidate such A/c's.)
(SEBI & AS provides guidance just relates to accounting not for its existance) .
i have to refer ESOP guidline for this.
Regards
M.s.Kabra
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