transactions that trigger off such ban and whether these themselves arebanned .It is clarified that exercise of ESOPs will neither be deemed to be"original transaction" nor "banned transaction". Thus, by acquiring sharesunder ESOPs, you don't trigger a ban and if you are banned for sixmonths, you can still exercise ESOPs. The reasoning given is that the banis only on transactions in secondary market. (Incidentally, I had felt that"However, taking all things into account, perhaps the intention is not tocover shares acquired under ESOPs Schemes. ").But sale of sharesacquired through ESOPs is covered but it will only be deemed to be an"original transaction" and not a
In other words, evenif you are under a ban, you can still sell shares acquired under ESOPs butonce you sell such shares, you have triggered a ban of six months. Onthis aspect, I do not understand the basis of clarifying that the sale of shares acquired under ESOPs scheme will not be an "original transaction
logic of covering secondary market transactions should apply herealso .Then, it is clarified that every later transaction triggers a fresh sixmonth ban. A purchase on 1stFebruary results in ban till 1st August.However, if there is a fresh purchase on 15th March, there is a ban now till15th September. Effectively, this means that the ban period is from 2ndFebruary till 15th September. What about transactions before thisamendment - will the amendment create ban in respect of them too - thisis an academic issue now atleast as the six month period is nowcomplete. It is clarified though that the transactions before theamendment are not to be considered. On a similar note, unwinding of positions in derivatives held on the date of this amendment is possible. Acrucial clarification is that the ban on "sale" of shares for personalemergencies is permissible by waiver by the Compliance Officer. This isnot evident from a plain reading of the provision and I had opined that"This bar on such transactions is total. There are no circumstanceswhether of urgent need or otherwise
under which the bar can belifted. There is also no provision under which even SEBI could grant
But SEBI thinks it is so evident and hence let us accept thisgift without creating legal niceties! Note that this clarification applies onlyto sales and there can be no purchases within these six month ban periodobviously there cannot be any personal emergency to purchase shares!
Q.2 what is the provision of green shoe option and how is it used bycompanies to stabilize prices?Ans:-
Green Shoe Option (GSO) is an option where a company can retaina part of the over-subscribed capital by issuing additional shares.Oversubscription is a situation when a new stock issue has more buyersthan shares to meet their orders. This excess demand over supplyincreases the share price. There is another situation called under subscription. In under subscription, a new stock issue has fewer buyers than the shares available. An issuing company appoints a