BANGALORE: Capital market watchdog SEBI on Thursday finalised an easier set of regulations for employee stock option schemes that among other things would classify Employee Stock Options (ESOP) Trusts as a separate category of shareholding entities.

With the new norms, the Securities and Exchange Board of India (SEBI) has allowed companies to have employee stock option programmes where they can buy their own company shares subject to certain conditions.

Employee Stock Options is a practice followed world over and the market regulator has outlined certain safeguards to improve the governance and transparency of the schemes and also address concerns regarding potential market abuse.

The decision was taken at a board meeting of SEBI in New Delhi.

“In order to help them (promoters) retain their control and at the same time help them reward the employees we have now come out with certain safeguards with regard to their use or misuse,” SEBI Chief U.K. Sinha told reporters in New Delhi.

Further, he noted that in India, some companies count it (shares held by ESOP Trusts) in the promoter category and some companies count it in the public category.

“We have now created another category that whatever shares are held in the ESOP Trust they will be neither counted as a promoter group or counted as a public it will be counted as a separate group and for meeting the requirements of our regulations we have given them five years time,” Mr. Sinha said.