31st July, 2018
Sub: Review of Adjustment of corporate actions for Stock Options
To all Listed Companies
Attention of such aforesaid listed companies are drawn to SEBI Circular Ref. No. CIR/MRD/DoP-1/P/00108/2018 dated July 05, 2018(copy available at CSE web-site at www.cse-india.com and SEBI web-site at www.sebi.com) wherein
It is mentioned that “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.”
Now, 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.
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.
This is for information and necessary action.
CS Chandrani Datta