Difference between the Sweat equity shares and ESOP or ESOS ?

1> Sweat Equity is grant of shares at discount or without monetary considerations whereas Employee Stock  Option Plan (ESOP) / Employee Stock Option Scheme Scheme (ESOS) is grant of option to purchase share at predetermined price given to employees.


2> Sweat Equity can be issued to the promoters of the Company whereas ESOS/ESOP cannot be issued to the promoters or promoter group.


3> Minimum lock in period of 3 years for Sweat Equity whereas no such lock in period for ESOP and lock in period of 1 year for Employee stock purchase scheme (ESPS).

Can a Private Company issue bonus shares? if so what is the procedure?

Yes Private Company can issue bonus shares by capitalizing the current year profits and accumulated reserves.

Below is the procedure for Bonus issue of shares by Private Company:

1> check the Articles of Association( AOA) of company whether it has clause for capitalization of profits, if AOA does not have alter it by passing special resolution.

2> pass ordinary resolution to issue the bonus shares and specify the no. of shares issues and pro ratio, price at which shares are issued. Resolution should be register with ROC in form-23.

3> conduct board meeting to issue the shares.

4> file return on allotment Form-2 and issue the share certificates with effect to the allotment.

Relevant Sections: Regulation No.96 of TABLE A, 75(2),192,31