Share issuance on conversion of restricted stock options allowed: Sebi

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New Delhi | February 04, 2020 8:16 PM

Expressing its views on clarification sought by IT giant Infosys, Sebi said that buyback regulation restricts further issue of capital for a period of one year from the expiry of the share repurchase programme period, except in discharge of its subsisting obligations.

sebi, sebi share buyback, restricted stock option, InfosysThe watchdog also said that its views are expressed with respect to clarification sought in terms of buyback norms and SBEB regulation and is not applicable for any other Sebi regulations.

The issuance of shares following conversion of restricted stock options (RSUs) will be allowed under the buyback regulation, markets regulator Sebi has said. Expressing its views on clarification sought by IT giant Infosys, Sebi said that buyback regulation restricts further issue of capital for a period of one year from the expiry of the share repurchase programme period, except in discharge of its subsisting obligations.

“The issuance of shares pursuant to conversion of RSUs would be considered as subsisting obligations… and the applicant (Infosys) may issue the equity shares after the completion of one year vesting period,” Securities and Exchange Board of India (Sebi) said. This is subject to compliance of provisions of SBEB (Share Based Employee Benefits) Regulations, buyback norms and Companies Act, it added. Conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or debentures into equity shares comes under subsisting obligations.

Infosys had sought an informal guidance from Sebi on whether the company can allot equity shares upon exercise of vested restricted stock options units after completion of the one year vesting period — June 21, 2020 — prior to the one year period from the end of the buyback period. The watchdog also said that its views are expressed with respect to clarification sought in terms of buyback norms and SBEB regulation and is not applicable for any other Sebi regulations.

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