ESOPs, a positive healthy move

Ravi LADDUWAHETTY

The Employee Share Ownership Schemes (ESOP) available to listed corporates is a very positive move which is implemented by listed companies to employees who have an opportunity to participate in the equity, Colombo Stock Exchange CEO Surekha Sellahewa told Daily News Business yesterday.

The procedure is that these ESOPs generally get the approval of Boards of Directors and the shareholders of the company, enabling them to purchase them, she said.

The CSE CEO further explained, “Under the CSE Listing Rules 5.6 (a) and (b) relating to Employee Share Ownership and Option Plan, the applicant Entity is required in the first instance to make an announcement to the exchange of the decision of the Board of Directors to issue shares on an Employee Share Ownership and Option Plan (ESOP) immediately upon such decision being made.

Such announcement shall include the number of shares to be issued, the consideration for which the shares are to be issued, current stated capital of the Entity.

“The issue of shares by way of Share Ownership and Option Plan is subject to the Exchange approving in principle, the issue and listing of shares and obtaining shareholder approval at a General Meeting,” she said.

If a Listed Entity proposes to create or establish an Employee Share Ownership or Option Plan whereby shares of the Entity will be allotted to or held by any person on trust on behalf of directors and or employees of the Entity the following procedure must be followed:- Prior approval of the shareholders by way of Special Resolution at a General Meeting obtained to establish an Employee Share Ownership and Option Plan and for the issue of shares under such Ownership and Option Plan.