Go AD-Free with CAclubindia Pro and get a FREE CCI Coffee Mug. Subscribe Now!

mode of raising capital

sbhaktha (bcom + lawstudent @ present) (109 Points)

29 March 2019

how does the mode of raising capital from employee matter if the mode are private placement or sweat equity

Reply
Follow
Share

6 Replies

pritesh jain (155 Points)
Replied 29 March 2019

private placement are investment by employee in the company and esops are compensation to employees against their sweat and it has lock in period whille private placement not

Upgrade to CAclubindia Pro. Subscribe Now!

sbhaktha (bcom + lawstudent @ present) (109 Points)
Replied 30 March 2019

thanks pritesh. but in case of employees stock option allotted for consideration other than cash, where is the capital coming from?

pritesh jain (155 Points)
Replied 30 March 2019

esop is not required the capital you have to reserve authorised capital and when esop vest by employees file pas-3 every time no need to follow private placement rule...

Priya Kashyap (Student) (7053 Points)
Replied 31 March 2019

yeah true said private placement is just further issue purpose but sweat equity for directors and employees

2 Like

sbhaktha (bcom + lawstudent @ present) (109 Points)
Replied 31 March 2019

agree. with both of your views. but i want to understand when shares are issued pursuant to sweat equity, there is no money coming from allotees. in this case how do we show increase I'm paid up capital as there is no money coming into the company.. like do we take from reserves.?

Upgrade to CAclubindia Pro. Subscribe Now!

Priya Kashyap (Student) (7053 Points)
Replied 02 April 2019

in case of sweat equity shares as are issued by a company to its directors or employees at a discount or for consideration, other than cash for providing them know how or making available rights in the nature of intellectual property rights or values addition ...

so at least company infuses some capital here

3 Like