~Bonds~💛

Bonds are the debt security where an issuer is bound to pay a specific rate of interest as per the agreed term of payment and the principal amount to be paid later as maturity of bond. A bond either issued by government or corporation has a specific maturity period which can range upto few days to 10-30 years or even more.The bond period generally would be of 5 to 10 years.The bond holder generally are like a creditor to the companies. Bonds are referred as short and long-term bonds. Bonds have fixed face value, which the amount has to be returned to the investor/creditor upon a maturity of bond. During this period investor/creditor receive a regular payment of interest, semi annually or annually, which is calculated as certain percentage of the face value and it is known as ‹coupon payment›.

THERE ARE SOME TYPES OF BONDS

GOVERNMENT BONDS -  These bonds are issued by government of India or by public sector units (PSU's) in india. These bonds are generally issued with the low rate of interest as compare to other types of bonds. These bonds are secured as they are backed up with security from government of India.

CORPORATE BONDS -   These bonds are issued by the private Corporate companies. Indian corporate issue secured or non secured bonds.The private Corporate has to take care of the credit rating given by the credit rating agencies before investing in these bonds.

TAX SAVING BONDS - In India, the tax saving bonds are issued by the government of India for providing benefits to the investors in form of tax saving. The bond creditors/investors along with getting the normal interest they would also get tax benefits. In India these bonds are listed by National stock exchange and bombay stock exchange. Hence they can easily be liquidated and sold in the open market.

BANKS AND OTHER FINANCIAL INSTITUTIONS  BONDS - They are issued by banks or any financial institutions. The financial market is well requlated and the majority of bond markets are from this segment.

FOREIGN CURRENCY EXCHANGEABLE BONDS (FCEBs) -  These bonds are used to raise funds from international markets against the security and exchangeability of shares of another companies.

It means:-

1) The principal and interest is payable in foreign currency.

2) Bonds are expressed in foreign currency.

3) Issued by an issuing company, being an indian company.

4) exchangeable into equity shares of another company.

5) wholly or partly or on the basis of any quity related warrants attached to debt instruments.

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~Employee Stock Option Scheme(ESOP)~💛

THE TERM ‘EMPLOYEE STOCK OPTION SCHEME' [ESOP] HAS BEEN DEFINED UNDER SECTION 2(37) OF COMPANIES ACT 2013.

Employess stock option scheme (ESOP) means the option given to the directors, officer, employees of the company or its holding company or subsidiary company or companies, if any, which gives such directors ,officers or employees ,the benefits or right to purchase , or the subscriber for the shares of the company at the further date at a pre-determined price.

HOW IS ESOP GOOD FOR EMPLOYEES

Employess participants to the plan can receive significant retirement benefits at no monetary cost to them. 

Being part of an ESOP company can provide unique rewards for employees. 

An ESOP is a great way to enhance the companies ability to retain and recruit at top.

WHAT HAPPENS TO ESOP, IF YOU QUIT ?

If you quit, the ESOP distributions are deferred for six years under IRS regulations.

Once those six years passes, you may receive the value of your ESOP shares in either total sum of amount or in equal payments made over five years.

AT WHAT AGE CAN YOU WITHDRAW ESOP?

The distribution automatically begins on April 1 of the first year after you reach 70 1/2 years of age.

If you retire early, distribution must begin within six years of your retirement date, with payouts being paid over a span of five years.

CONDITION FOR COMPANIES FOR ISSUING EMPLOYEE STOCK OPTION SCHEME [u/s 62(1) (b)].

* ESOP must be authorized in the articles of association.

* Approval of members are required by passing special resolution at the general meeting.

* There should be gap of atleast 1 year between grant of option ( is an opportunity to buy the shares of the company in which he or she works) and vesting of option (Vesting is known as the time period during which you unconditionally own the stock options that are issued to you by your company, Until you vest the stock options, you forfeit them if you were to leave the company. Typically, that time period is four years).

* Company is free to set the lock-in period (Lock-in period in which the investor is prohibited from redeeming the units of the fund, either partially or wholly).

* The company shall maintain the register in form SH-6

* The offer given to the employees is not transferable, nor it can be pledge or hypothecated (money by law for a specific purpose).

* No voting rights & dividend will be given unless the option is exercised.

* Disclosure to be made in board report.

* Listed companies to be comply with SEBI guidelines.

* Disclosure to be made in explanatory statement.

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