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Raman a shareholder who works in a Maruti Udyog Ltd. Which is a pioneer in manufacturing small cars got an invitation from the company to buy shares issued by the company under the Employees Stock Option Plan. At first he is not interested in buying the shares but after compulsion from his friends he exercised his option to buy shares from the company. Afterwards he came to know this type of issue can be made to the promoters of the company for the services rendered by them to the company. He purchased 200 shares of ₹10 each at a premium of ₹25 whereas the current market value of the share is ₹150.

1. The shares issued to the employees of the company are called as 

a. ESOP 

b. IPO 

c. Preferential allotment 

d. Public issue

2. What type of shares can be issued under ESOP? 

a. It should of the same class of shares already issued 

b. It should be a new issue of shares 

c. It should be of preference shares only 

d. It can of any type of shares.

3. The value of option is : 

a. The issue price of the shares 

b. The market price of the shares 

c. The difference between market price and issue price of the share 

d. The face or par value of the shares

4. What name is given for the shares issued to the promoters of the company as remuneration for incorporation of the company? 

a. Sweat Equity

b. Salary shares 

c. Remuneration shares 

d. Normal issue of shares

1 Answer

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Best answer

1. a. ESOP

2. a. It should of the same class of shares already issued

3. c. The difference between market price and issue price of the share

4. a. Sweat Equity

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