Right Issue, bonus issue, ESOP,SES

What is the primary difference between a Dilutive FPO and a Non-Dilutive FPO?

• A Dilutive FPO is for private companies, while Non-Dilutive is for public companies.

• In a Dilutive FPO, new shares are created; in a Non-Dilutive FPO, existing shareholders sell their shares.

• A Dilutive FPO increases EPS, while a Non-Dilutive FPO decreases EPS.

• Non-Dilutive FPOs are illegal under the Companies Act 2013.

Which section of the Companies Act 2013 governs the issue of Rights Shares?

• Section 54

• Section 62

• Section 63

• Section 2(88)

In a Rights Issue, what does the "Right of Renunciation" allow a shareholder to do?

• Cancel the company's public offering.

• Demand a refund for previous shares.

• Sell their right to buy the new shares to another person.

• Convert their equity shares into debentures.

Which of the following reserves is strictly prohibited from being used to issue Bonus Shares?

• Free Reserves

• Securities Premium

• Capital Redemption Reserve

• Revaluation Reserve

Which of the following is a mandatory condition for issuing Sweat Equity Shares?

• The shares must be issued within 1 month of the resolution.

• The shares must be authorized by a Special Resolution.

• The shares can be issued to anyone, including the general public.

• The company must be listed on an international exchange.

What is the "Lock-in Period" for Sweat Equity Shares issued by an unlisted company?

• 1 year

• 3 years

• 5 years

• 6 months

How does a Bonus Issue affect the Net Worth of a company?

• It increases the Net Worth significantly.

• It decreases the Net Worth by the amount of the bonus.

• It has no impact; the total equity remains the same.

• It increases cash flow but decreases Net Worth.

What is the limit on the quantity of Sweat Equity Shares a company can issue in a single year?

• 10% of existing paid-up capital.

• 15% of existing paid-up capital or ₹5 crores, whichever is higher.

• 25% of authorized capital.

• 50% of free reserves.

In an Employee Stock Option Plan (ESOP), what is the "Vesting Period"?

• The time window during which the employee buys the shares.

• The date the option is granted.

• The duration an employee must wait or work before they earn the right to the shares.

• The period after which the shares expire.

When accounting for an Employee Stock Purchase Plan (ESPP), how is the discount given to employees recognized?

• As a Capital Loss.

• As a Compensation Expense.

• As a reduction in Share Capital.

• It is not recognized in the books.