The stock option price will be fixed by the company concerned (there is no ceiling or floor).

However, Sebi chairman DR Mehta said the disclosures in the balance-sheet and the provisioning norms will prevent companies from offering steep discounts. The other majorconcession for companies planning ESOPs is that there is no restriction on the maximum number of shares issued to a single employee apart from certain disclosures.

There is, however, now a one-year lock-in between the grant of the option and its vesting. After one year, the period during which the option can be exercised would be determined by the company. Promoters and large shareholders (with a minimun 10 per cent stake) have been kept outside the purview of ESOP as they will be covered under the Sweat Equity guidelines expected to be announced soon.

By abolishing the fixed par value concept, Sebi has now given companies some flexibility. Existing companies which have issued shares at Rs 10 or Rs 100 can also avail of this by splitting or consolidating the existing shares provided they are dematerialised. Responding to queries over the existing norm under Section 13 (4) of the Companies Act 1956, which allows firms to issue shares at a discount even now, Mehta said no company had till date availed ofthis option. Besides, the cap of 10 per cent also rendered it ineffective. He also said a complete abolition of the `par value' concept is not possible now as it requires an amendment in the Companies Act.

Sebi executive director (in charge of primary markets) Pratip Kar said the previous norm was not effective as no company wanted to issue shares at a discount as they felt it would jeopardise their offering. "Issuing shares at a discount to the par value would have sent a signal that the intrinsic worth of the company's shares are very low and it is likely that investors would have shunned the issue. Now, although shares can be issued at less than Rs 10, it would still be at par or premium to its par value," he added. Besides, the new norm will also help increase the liquidity in the market. The nitty-gritties are still being worked out.

Also for the primary market, are the revised entry norms. Sebi has done with the three-year dividend-paying norm for a company planning an IPO and replaced it with the`ability to pay dividend' which will take into account the distributable profits as mentioned by the auditors in a company's annual report. It was also decided that for companies coming out with IPOs, it would be mandatory to have a minimum pre-issue net worth of not less than Rs 1 crore in three out of the preceding five years. The 5 per cent FI funding rider in the case of infrastructure IPOs has also been relaxed. Disclosure norms for both par as well as premium issues have now been made identical.Apart from allowing share transfer agents and registrars to become depository participants, the Sebi board also enhanced the limit for client-holding by depository participants.