Comparison Between Sweat Equity Shares and ESOP


Sweat Equity Shares
Stock Options
Sweat Equity Shares are issued as consideration for creation or transfer of IPRs to the company or as other value addition these can be issued to employees, Officers and Directors of the Company. 
ESOPs are given in the nature of Incentive and retention plan these can be issued to employees and officers. ESOPs cannot be issued to Promoter or person belonging to the promoter group.
Provisions of Companies Act, 1956, SEBI (Issue of Sweat Equity) Regulations, 2002 and Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003 are applicable to Listed and Unlisted companies.
Provisions of Companies Act, 1956 and SEBI (ESOS and ESPS) Guidelines, 1999 is applicable to listed companies.
These shares can be issued at discounted price or free for know-how and services to the company.
These options can be issued with conversion right at a pre determined price. The issue price can be less than the intrinsic value of the shares.
The consideration can be partly cash and partly IPRs/value addition or fully non-cash consideration.
The consideration has to be paid in cash.
These are mainly intended to be issued to build up equity for directors or promoters with technical capability but with meager financial resources.
These are generally issued based on a scheme to be formulated by the company stipulating the eligibility criteria such as number of years of services, employee grade etc.
These Shares have compulsory Lock-In Period of 3 years.
Lock-In period is not specified for the ESOP.
Pricing Guidelines are defined for Sweat Equity Shares.
No Pricing guidelines are defined.
A separate register of Sweat Equity Share issued has to be maintained.
There is no separate register required to be maintained.
Sweat Equity shares cannot be issued by Unlisted Public Company more than 15% without the approval of Central Government.
There is no such restriction on  ESOP.

For any clarifications or Professional Advisory on ESOP and all types of Stock Options,
Contact:

Ms. Anjali Aggarwal,
+911140622230, +919971673336,
Email:-anjali@indiacp.com

Ms. Mohini Varshneya,
+911140622231, +919971673332,
Email:-mohini@indiacp.com

Do visit our ESOPonline and  ESOP GUARDIAN                                                                                                                                   

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