Employee Equity Compensation
Regulatory Issues: SO/RS(U) and SPP
Please note: This document should not be relied on as legal advice.
Securities Law Requirements
No securities law or other filing or reporting requirements apply to employee equity awards granted by a
foreign company to employees of its branch or subsidiary in India. Securities filing requirements apply
only to equity awards granted by Indian companies listed on a recognized stock exchange in India.
The Securities Exchange Board of India (i.e., the Indian equivalent of the US SEC) provides for insider
trading regulations. However, these provisions are not applicable to awards made by a foreign entity to
employees of its branch or subsidiary in India.
Employees are permitted to purchase and hold foreign securities and to receive and hold awards, subject
to the restrictions set out in the Foreign Exchange Controls section below.
Foreign Exchange Controls
RS(U): Restricted stock or restricted stock units are generally issued under plans in which there is no
transfer of money abroad for the purchase of shares. Such awards are regulated under Exchange Control
guidelines applicable to “Cashless Mechanisms,” and in addition to employees and directors, they can
also be granted to persons resident in India so long as there is no cash remittance outside India provided
the employee stock option scheme permits participation by such persons..
Transfer of Funds Abroad by Employees or the Local Entity: The Reserve Bank of India (“RBI”)
issued a Master Circular dated July 1, 2007 (“MC”) that consolidates the existing instructions issued by
the RBI. According to the MC, it is permitted for a person resident in India, who is an individual, to (i)
acquire shares under a cashless employee stock option scheme issued by a company outside India,
provided that the scheme does not involve any remittance from India; or (ii) purchase equity shares
offered by a foreign company under its stock o