ݺߣ

ݺߣShare a Scribd company logo

E S O P A N D R I G H T I S S U E

•
•
Rashmi Prasad
Rashmi Prasad

An employee stock option plan (ESOP) allows employees to purchase company shares at a predetermined price on a future date. ESOPs are used to incentivize and reward employee performance and create a sense of ownership. Under an ESOP, employees have the right to buy company shares on a predetermined date and price. The objective is to motivate employees and improve shareholder value.

1 of 12
EMPLOYEE STOCK OPTION PLAN Acc to sec 2(15 A) of the companies act1956 “ Means an option given to the whole time directors ,officers and employees .an right to purchase at a future date ,the securities offered by the company at a predetermined price” ESOP,S are granted to management and key employees as a form of incentive compensation
E mployee Stock Option Plan (ESOP), is a plan through which a company awards Stock Options to the employees based on their performance. Under an ESOP, the employees have right to buy the shares of the company on a predetermined date at a predetermined price. The objective of ESOP is to motivate the employees to perform better and improve shareholders' value. Apart from giving financial gains to the employees, ESOP also creates a sense of belonging and ownership amongst the employees. Different terms used in an ESOP
RIGHT ISSUE A public company that wants to raise capital can opt for a Rights Issue. In a rights issue, existing shareholders have the right to buy a specified number of new shares of the firm at a specified price within a specified time.
CHARECTERESTICS RIGHT AVAILABLE TO EXISTING SHAREHOLDERS. SHARE PRICE LESS THAN THE MARKRT PRICE, RAISE ADDITIONAL CAPITAL CONTRAST OF IPO REDUCES DEBT TO EQUITY RATIO
CONDITIONS ANY COMPANY CAN LOPT RIGHT ISSUE IF have completed two years of incorporation and completed 1 yr. from first allotment . FIRST TO EXISTING SHAREHOLDERS. AT LEAST 15 DAYS PRIOR NOTICE NOT APPLICANLE TO A PRIVATE COMPANY SHOULD CONTAIN RIGHT OF RENUNUCIATION
REASONS INFLATION REPLACEMENT COST EXPANSION PROJECTS IMPROVE CAPITAL STRUCTURE EXPANSION BY TAKE OVER
ADVANTAGES PRIVILAGE TO SHAREHOLDERS INCREASE IN GOODWILL HELP TO FINANCE MANAGERS LOWER PRICE OF SHARES EASY SOURCE OF FUND
DISADVANTAGES DILUTED VALUE OF SHARES LOW SHARE PRICE
ADVANTAGES Right issue gives the existing shareholders an opportunity to maintain their pro-rata share in the earning and surplus of the company and the voting power as before. The goodwill of the company increases in the eyes of existing shareholders. The financial management is relived of the botheration of selling the shares To campanies
ADVANTAGES Right issue gives the existing shareholders an opportunity to maintain their pro-rata share in the earning and surplus of the company and the voting power as before. The goodwill of the company increases in the eyes of existing shareholders. The cost of issue of such shares will also be lower. The financial management is relived of the botheration of selling the shares If right shares are offered by the shareholders enthusiastically, it proves that financial position of the company is sufficiently good, and the company can obtain more loans at lower rate of interest. Related Articles

More Related Content

E S O P A N D R I G H T I S S U E

  • 1.
  • 2.
  • 3. EMPLOYEE STOCK OPTION PLAN Acc to sec 2(15 A) of the companies act1956 “ Means an option given to the whole time directors ,officers and employees .an right to purchase at a future date ,the securities offered by the company at a predetermined price” ESOP,S are granted to management and key employees as a form of incentive compensation
  • 4. E mployee Stock Option Plan (ESOP), is a plan through which a company awards Stock Options to the employees based on their performance. Under an ESOP, the employees have right to buy the shares of the company on a predetermined date at a predetermined price. The objective of ESOP is to motivate the employees to perform better and improve shareholders' value. Apart from giving financial gains to the employees, ESOP also creates a sense of belonging and ownership amongst the employees. Different terms used in an ESOP
  • 5. RIGHT ISSUE A public company that wants to raise capital can opt for a Rights Issue. In a rights issue, existing shareholders have the right to buy a specified number of new shares of the firm at a specified price within a specified time.
  • 6. CHARECTERESTICS RIGHT AVAILABLE TO EXISTING SHAREHOLDERS. SHARE PRICE LESS THAN THE MARKRT PRICE, RAISE ADDITIONAL CAPITAL CONTRAST OF IPO REDUCES DEBT TO EQUITY RATIO
  • 7. CONDITIONS ANY COMPANY CAN LOPT RIGHT ISSUE IF have completed two years of incorporation and completed 1 yr. from first allotment . FIRST TO EXISTING SHAREHOLDERS. AT LEAST 15 DAYS PRIOR NOTICE NOT APPLICANLE TO A PRIVATE COMPANY SHOULD CONTAIN RIGHT OF RENUNUCIATION
  • 8. REASONS INFLATION REPLACEMENT COST EXPANSION PROJECTS IMPROVE CAPITAL STRUCTURE EXPANSION BY TAKE OVER
  • 9. ADVANTAGES PRIVILAGE TO SHAREHOLDERS INCREASE IN GOODWILL HELP TO FINANCE MANAGERS LOWER PRICE OF SHARES EASY SOURCE OF FUND
  • 10. DISADVANTAGES DILUTED VALUE OF SHARES LOW SHARE PRICE
  • 11. ADVANTAGES Right issue gives the existing shareholders an opportunity to maintain their pro-rata share in the earning and surplus of the company and the voting power as before. The goodwill of the company increases in the eyes of existing shareholders. The financial management is relived of the botheration of selling the shares To campanies
  • 12. ADVANTAGES Right issue gives the existing shareholders an opportunity to maintain their pro-rata share in the earning and surplus of the company and the voting power as before. The goodwill of the company increases in the eyes of existing shareholders. The cost of issue of such shares will also be lower. The financial management is relived of the botheration of selling the shares If right shares are offered by the shareholders enthusiastically, it proves that financial position of the company is sufficiently good, and the company can obtain more loans at lower rate of interest. Related Articles