It is an option in relation to public company which is going for a public issue of the equity shares by allocating shares in excess of shares included in the public issue. It is used for stabilizing of post listing price in accordance with the provisions of Chapter VIII-A of SEBI Guidelines.Genererally after allotment of shares, short term investors start selling their shares in the market which creates excess supply as compared to demand so as to match such supply artificial demand is created by purchasing excess shares through merchant banker. Such types of mechanism are popular in international countries. In India this was adopted by companies like ICICI bank, Maruti Suzuki, Tata consultancy services etc. DISCLOSURES REQUIRED IN PROSPECTUS: Terms and Conditions stated in agreements between company and stabilizing agent. Details of agreement with promoters, who will lend their shares not in excess of 15% of total issue size. Maximum number of shares proposed to be over allotted by the company. PROCESS OF GREEN SHOE OPTION: APPOINTMENT OF STABILISING AGENT: Company need to appoint merchant banker or book runner as stabilizing agent who will be responsible for the price stabilisation process. SHAREHOLDERS RESOLUTION: A resolution is required to be passed in General Meeting for approval of shareholders to allot specified securities to the stabilising agent on expiry of stabilising period. EXCESS ISSUE OF SECURITIES: Stabilising agent enters into agreement with promoters for borrowing specified securities from them not in excess of 15% of the issue price. Only those promoters who are having more than 5% of the pre issue capital are entitled to lend securities to Stabilising agent. PERIOD OF STABILISATION: This process shall be available for a period not exceeding 30 days from the date on which trading permission was given by recognised stock exchange. OPENING OF GSO BANK ACCOUNT: A special account different from company account need to be opened for crediting all monies received from the applicant against over allotment. OPENING GSO DEMAT ACCOUNT: A special demat account need to be opened with the depository participant for crediting securities bought from the market against excess allotment money received which is kept in separate account. RETURNING SECURITIES BACK TO PROMOTERS: The securities which are brought from market and kept in special account need to be returned to promoters within 2 working days after the end of stabilising period. FRESH SECURITIES ISSUE TO PROMOTERS: Within 5 days of the closure of the stabilisation period, if the stabilising agent is not able to buy the specified securities from the market then the issuer will allot the specified securities to the promoters to the extent of such shortfall to the GSO demat account. Stabilising agent shall pay the money out of the GSO account to the company for the shares allotted to promoters. SURPLUS MONEY TO BE TRANSFERRED TO INVESTOR PROTECTION AND EDUCATION FUND: All the money left after all deductions and remittances to the company shall be transferred to investor protection and education fund. REPORTING REPORTING TO STOCK EXCHANGE: On daily basis report shall be submitted to the stock exchange during stabilising period and final report shall be submitted to board. MAINTAINANCE OF REGISTER: The stabilising agent shall maintain a register for a period of at least 3 years from the end of stabilising period which shall contain the details for the names of promoters from whom the specified securities were borrowed, number of securities borrowed, details of allotment made on expiry of stabilising period and details about price, date and time in respect of each transaction effected in course of stabilisation process. CONCLUSION: Green shoe option is an option to retain the excess subscription to an issue of shares to stabilise the post issue price of shares. It is a process of allocating shares in excess of the shares included in the public issue .This concept is not popular as India as compared to the International companies as excess money has to invested in investor protection and education fund so, companies found it less profitable and merchant bankers also do not bear any risk so gain less in such types of schemes so they find it less lubricating business.