Bengaluru : In a sharp criticism of regulator Sebi’s new insider trading norms, industry leader and Biocon chief Kiran Mazumdar Shaw said these rules have “draconian intent” and will kill the ESOPs.
The new norms have replaced nearly two-decade old regulations and provide for strict penal action for illicit transactions in shares of listed firms by promoters, key management personnel, their relatives and all connected persons with prior access to the ‘insider information’. Sebi notified these regulations in January this year and they came into effect on May 15.
“The new rules on Insider Trading prohibiting an employee from buying and selling a share within a period of six months is draconian in intent,” Shaw told PTI.
However, the 21-page regulations do not explicitly mention any such ban on share sales, including those allotted under Employee Stock Option Plans (ESOPs) which have been a key aspect of employee compensation at the companies.
“Why should the ESOPs be prohibited from buying and selling shares within a period of six months? Imagine, the financial losses the employee may face if he or she is compelled to sell his holdings when the company’s scrip has tanked?” The proposed rules under the policy has the touch of typical bureaucratic functioning, Shaw said. “These proposed rules have been framed by a babu sitting somewhere who do not understand the nuances of share market,” she added.
