About potential equity share

AS 4652 views 3 replies

heyya everybody, can anyone plz tell me whether sweat equity shares are potential equity  shares? and if not, then also tell me the reason? plz reply... thanx...

Replies (3)

according to me sweat equity share are issued to person who work for company for free and in exchange company issue him certain amt of share in good gesture. company afford the cost of these share so these are potential equity.

if i am wrong plz rectify me i would love to know about it in detail.....

HEYYA RACHIT, THANX FOR UR REPLY.. BT I HAV COME TO KNOW DAT SWEAT EQUITY SHARES ARE NOT POTENTIAL EQUITY SHARES... BT I DONT NO THE REASON WHY IT IS SO????

AS 20 defines "potential equity share" as follows - 

A potential equity share is a financial instrument or other contract that

entitles, or may entitle, its holder to equity shares

 

Thus, SWEAT EQUITY SHARES are potential Equity Shares as it entitles the holder (employee) for a equity share.

 

Thanks


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