Preferential allotment of shares

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2013 Hi,

Where a public company has made preferential allotment of shares to its employees, can the difference between the face value of shares and the fair market value of the shares be treated as compensation paid to the employees?

Ajay Mishra

Ajay Mishra (Expert)
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15 April 2013 Hi

Its depend on whether you are alloting shares under ESOP scheme or through preferential allotment.

In ESOP it will be considered as compensation otherwise it will not be treated as compensation if shares are alloted through preferential basis.

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