SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999
11. Non-transferability of option
11.1 Option granted to an employee shall not be transferable to any person.
11.2 (a) No person other than the employee to whom the option is granted shall be entitled to exercise the option.
(b) Under the cashless system of exercise, the company may itself fund or permit the empanelled stock brokers to fund the payment of exercise price which shall be adjusted against the sale proceeds of some or all the shares, subject to the provision of the Companies Act.
11.3 The option granted to the employee shall not be pledged, hypothecated, mortgaged or otherwise alienated in any other manner.
11.4 In the event of the death of employee while in employment, all the options granted to him till such date shall vest in the legal heirs or nominees of the deceased employee.
11.5 In case the employee suffers a permanent incapacity while in employment, all the options granted to him as on the date of permanent incapacitation shall vest in him on that day.
11.6 In the event of resignation or termination of the employee, all options not vested as on that day shall expire. However, the employee shall, subject to the provision of clause 5.3(b) shall be entitled to retain all the vested options.