Business Times

SEC ready with Share Option rules

By Duruthu Edirimuni Chandrasekera

The Securities and Exchange Commission (SEC) has finalised amendments in the existing regulation on Employee Share Option Schemes (ESOS) and is likely to introduce them next month, SEC sources said.

"There’re gaps in the existing rules for ESOS and these don't reflect international best practices and, in a bid to rectify these gaps in publicly listed firms, the SEC called for comments on a consultation paper on new rules for ESOS sometime in July, Now some amendments to the rules have been made and we’ll be putting them out by next month,” a SEC source told the Business Times.

He said that the total number of ESOS to be issued by a listed entity should not ideally be more than 5% of the total number of shares issued by the listed firm, in keeping with international best practices.
"We have included the 5% threshold in the new regulation,” he said, adding that currently there isn’t any ceiling.

The new rules also contain that any single director/employee is only entitled for no more than 1% of the total number of shares issued though the ESOS. A capital market expert noted that now, through ESOS, some major shareholders of listed firms manipulate control. "The new rules will give adequate protection to the investors,” he said.

The new regulation also provide for an implementation and monitoring by a committee/board when an ESOS is decided by a firm, with members who don't have a conflict of interest. These rules have also covered some existing ESOS, which are not regulated under the present rules. "These schemes were incorporated before 2000, when the existing rules were established," the SEC source said.

He said that firms with such ESOS (currently) can purchase their own shares from the market and then allocate these shares to the employers. Now with the new rules they must issue new shares,” he added.

Some firms where ESOS are held in share trusts are recommended to allocate them to the staff or dispose them (in the stock market). "This particular rule stops anyone from manipulating a listed firm’s control through an ESOS,” the capital market expert said.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
Kotelawala, GK depositors meet tomorrow
Selective tax holidays after the budget
French firm ‘open’ mind on Lankan fuel entry
Central Bank scrutinizes Harry J’s claims in HNB sale issue
Shell Gas deal still incomplete
PB Jayasundera to get wide administrative powers
Dust and chaos on the Galle Road
Comment - Working in the Middle East? It’s not worth it!
Feature - Potential for renewable energy in Sri Lanka
Govt. killing entrepreneurship spirit with unfair tax policies
F&G maturity default case fixed for ex-parte trial
Haycarb launches new log in new global re-positioning strategy
Sri Lanka on the map for ‘frontier’ stock markets
SL drawing a lot of foreign investment interest
Central Bank: Only a supervisor not a guarantor of deposits
National level e-waste management programme to be launched soon
Time to kick in fundamentals to the bear market
Colombo Dockyard builds second passenger ship for India
Janashakthi launches unique Sports Insurance Policy
Machinery, equipment exports see August earnings rise sharply
SriLankan launches Air Taxis
Government to formulate plan to list state entities after the budget
Only 27 of 35 finance companies are CBSL compliant
School accounts better than private sector ones
World’s largest BPO and KPO Certifications enter Sri Lanka
Hayleys launches Farmtrac 4-wheel locally
More and more companies eye the North for investment, business
Heladiv opens 10th and largest tea boutique in Beijing
Sri Lanka to tighten mobile phone regulations
MTI CEO briefs Bangladesh biz community
Fitch upholds HNB’s ‘AA-(lka)’ Stable
Investment Promotion Mission heads to Korea
JKH joins with TDG for freight forwarding
SEC ready with Share Option rules
Farmers using mobile for crop prices make more : Study
FCCISL helps 500 persons in war rehabilitation
Sri Lankan telephone directory goes electronic
CINEC awarded APAC Quality award
Virtusa supports reality TV enterprise competition
Rickmers Marine Agency Lanka gets ISO 9001 certified
One in 12 Lankans uses the Web
Dialog profits grow, cash flows improve and mobile phone subs reach 6.7 mln
Biyagama Hospital gets a facelift through Fonterra
SLT subscribers forced to pay more for telephone calls: Telecom expert
NDB Investment Bank structures largest securitisation in Sri Lanka
LEED project to help micro and small entrepreneurs in Vavuniya
Turning sand and dust into a money-spinner and a work of art
Change of stars at Burson-Marsteller


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2010 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution