Regulation 7 - Issue of shares under Employees Stock Options Scheme to persons resident outside India - Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017

7. Issue of shares under Employees Stock Options Scheme to persons resident outside India An Indian company may issue employees stock option and/ or sweat equity shares to its employees/ directors or employees/ directors of its holding company or joint venture or wholly owned overseas subsidiary/ subsidiaries who are resident outside India, provided that: (1) The scheme has been drawn either in terms of regulations issued under the Securities and Exchange Board of India Act, 1992 or the Companies (Share Capital and Debentures) Rules, 2014 notified by the Central Government under the Companies Act 2013, as the case may be; (2) The employee s stock option / sweat equity shares so issued under the applicable rules/ regulations are in compliance with the sectoral cap applicable to the said company; (3) Issue of employee s stock option / sweat equity shares in a company where investment by a person resident outside India is under the approval route shall require prior Government approval. Issue of employee s stock option / sweat equity shares to a citizen of Bangladesh/ Pakistan shall require prior Government approval. Provided an individual who is a person resident outside India exercising an option which was issued when he/ she was a person resident in India shall hold the shares so acquired on exercising the option on a non-repatriation basis.