SEBI Planning To Plug Gaps Allowing Founders To Own Stock Options

The Securities and Exchange Board of India (SEBI) does not want founders to own stock options if they have rights akin to those enjoyed by promoters, the sources with direct knowledge of the matter said.

The capital markets regulator is planning to change its rules to address concerns around founders and family members of tech or app-based startups owning shares under the employee stock ownership plan (ESOP), two sources told Reuters.

The Securities and Exchange Board of India (SEBI) does not want founders to own stock options if they have rights akin to those enjoyed by promoters, the sources with direct knowledge of the matter said.

A decision in this regard could come sometime this year, the sources added.

Under Indian laws, promoters hold direct and indirect control over the company, advise, direct and instruct the board of directors, and have the right to nominate directors to the board, but are barred from owning ESOPs.