31st July, 2018
NOTICE
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.
1.
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.
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
Executive-Listing