Jackpot for 650 employees! Mutual fund distributor plans Rs 34 crore stock surprise

In a rare move for corporate India, Sanjay Shah, chairman and managing director of Prudent Corporate Advisory Services, has secured regulatory approval to gift Rs 34 crore worth of shares to 650 employees and personal staff, including household help.

Shah, who holds a 42% stake in Prudent, approached the Securities and Exchange Board of India (Sebi) for an exemption after facing regulatory hurdles. Indian securities laws would have classified the recipients as part of the promoter group, potentially affecting the company’s governance structure. Sebi granted the exemption but clarified that the decision should not be considered a precedent.

The gifted 175,000 shares, representing 0.4% of Shah’s stake, are a token of appreciation to mark Prudent’s 25th anniversary. "This is not just a transfer of shares; it is my heartfelt thank you to those who have stood with me - not just as employees, but as companions on this journey," Shah said in a statement.


The move is reminiscent of IDFC First Bank CEO V Vaidyanathan's decision a few years ago to gift shares to his staff and personal aides. However, Shah’s gesture stands out because Prudent is a promoter-led company, making regulatory approval essential.

Employees receiving the windfall may, however, face tax implications. Under Indian tax laws, gifted shares exceeding Rs 50,000 are classified as income and taxed accordingly.

"This gesture commemorates Mr. Shah’s completion of 25 years in business. The transfer is a gesture of appreciation and gratitude, with no obligations or retention conditions attached," the company said in an exchange filing.

Prudent, India’s fifth-largest mutual fund distributor, went public in 2022 at an IPO price of Rs 630 per share. It now trades at Rs 1,920.55, making the gifted shares a significant financial bonus for the recipients.

Also read | Prudent's Shah gets Sebi nod to gift shares to staff

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