ESOP AND SWEAT EQUITY SHARES

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kumar (Querist)
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14 November 2008 ARE ESOP AND SWEAT EQUITY SHARES ARE DIFFERENT?
BOTH SHOULD BE GOVERNED BY SECTION 79A OF COMPANIES ACT , 1956 OR NOT?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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14 November 2008 SAME.

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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14 November 2008 No:
ESOP is Employee Stock Ownership Plans and
SWEAT EQUITY SHARES is similar but not exactly same.

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CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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14 November 2008 Sweat equity is a term used to describe the contribution made to a project by people who contribute their time and effort. It can be contrasted with financial equity which is the money contributed towards the project. It is used to refer to a form of compensation by businesses to their owners or employees. The term is sometimes used in partnership agreements where one or more of the partners contributes no financial capital. In the case of a business startup, employees might, upon incorporation, receive stock or stock options in return for working for below-market salaries (or in some cases no salary at all).

Ravikumar.G

Ravikumar.G (Expert)
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17 November 2008 ESOP : Employee ownership occurs when a corporation is owned in whole or in part by its employees. Employees are usually given a share of the corporation after a certain length of employment or they can buy shares at any time. A corporation owned entirely by its employees (such as a worker cooperative) will not, therefore, have its shares sold on public stock markets. Employee-owned corporations often adopt profit sharing where the profits of the corporation are shared with the employees. They also often have boards of directors elected directly by the employees. Some corporations make formal arrangements for employee participation, called Employee Stock Ownership Plans (ESOPs).