SEBI

Review of mechanism of dividend adjustment for stock options-SEBI

Review of mechanism of dividend adjustment for stock options-SEBI

CIRCULAR
CIR/MRD/DoP-1/P/00108/2018
July 5, 2018
To
All Stock Exchanges
Dear Sir/Madam,

Sub: Review of Adjustment of corporate actions for Stock Options.

1. SEBI, vide Circular No. SMDRP/DC/CIR-8/01 dated June 21, 2001, prescribed a framework for adjustment of corporate actions for stock option contracts. Further, SEBI, vide Circular No. SMDRP/DC/CIR-15/02 dated December 18, 2002 , set out principles for adjustment in derivative contracts at the time of corporate actions.
2. SEBI has been receiving representations from various stakeholders requesting to review the dividend adjustment framework for stock options. The suggestions were examined and placed before the Secondary Market Advisory Committee (SMAC) for deliberations. Based on the recommendations of SMAC, it has been decided to review the mechanism of dividend adjustment for stock options.
3. The adjustment in strike price shall be carried out in the following cases of declaration of dividends:
a. Dividends declared at and above 5% of the market value of the underlying stock ; or
b. All cases of dividends, where the listed entity has sought exemption from the timeline prescribed under the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
4. All other conditions stated in Circular No. SMDRP/DC/CIR-8/01 dated June 21, 2001 and Circular No. SMDRP/DC/CIR-15/02 dated December 18, 2002 shall remain unchanged.
5. Stock Exchanges are advised to:
5.1. take necessary steps and put in place necessary systems for implementation of the above.
5.2. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.
5.3. bring the provisions of this circular to the notice of the member brokers of the stock exchange and also to disseminate the same on the website.
6. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Yours faithfully,
Amit Tandon
Deputy General Manager
amitt @sebi.gov.in
Share
Leave a Comment

Recent Posts

  • Income Tax

Later SC ruling cannot render an act done in compliance of a court order a statutory default

A subsequent Apex Court ruling on the substantive issue cannot retrospectively make an act done in compliance of a binding…

11 hours ago
  • Income Tax

Interest payment on mobilisation advance to NHAI not liable to TDS u/s 194A

Interest payment on mobilisation advance to NHAI not liable for deduction of tax at source u/s 194A - ITAT Interest…

1 day ago
  • Income Tax

Typographical error in turnover accepted during assessment not a mistake apparent from record

Typographical error in turnover declared in ITR was not as a mistake apparent from the record u/s 154 when AO…

3 days ago
  • Income Tax

Plea that assessee was not aware of order cannot be brushed aside in absence of proof of service

Ground taken by assessee that he was not aware of the order cannot be brushed aside so lightly in absence…

3 days ago
  • Income Tax

Order rejecting stay of income tax demand should recite merits if it is a case for stay or not

In an order rejecting stay of income tax demand there should be a recital of the merits whether it is…

4 days ago
  • Income Tax

CBDT extends due date of tax audit for FY 2025-26 to 21st October 2026

CBDT has extended the due date for furnishing Return of Income for Assessment Year 2026-27 (FY 2025-26) in respect of…

1 week ago