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    Sweat equity share & ESOP

    Posted By : Ruchi / Published on : 26-Jul-2022 04:36 AM / View : 347 / Comment : 1

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    What is the difference between ESOP and Sweat Equity share?
    Read more on : esop share equity sweat

    • Hi Ruchi 

      Section 2(88) of the Companies Act, 2013 defines Sweat Equity Shares as equity shares issued by a company to its director or employee at discount or for consideration other than cash, for providing know-how or making available like intellectual property rights or value addition.

      Section 2(37) of the Companies Act, 2013 defines employees stock option as the option given to the directors, employees or officers of the company or of its holding or subsidiary company, the right to purchase or benefit or subscribe for the shares of the company at a predetermined price on a future date. Thus, ESOP is a scheme where a company proposes to increase its subscribed share capital by issuing further shares to its employees at a predetermined rate.

      This can be concluded that sweat equity shares are offered to only those directors or employees who make value addition to the company at discount price whereas ESOP refers to the options offered to all the employees at a predetermined price.

      Hope it helps!

      Thank You! 

      26-07-2022 / 05:20:27 AM
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