· In case of direct issuance , there is a time lag of more than a month when employees exercise the option and when he finally gets the shares in his Dmat account. This time can be reduce to a week in a case of trust and this help employees to avoid price fluctuation.
· Trust have the option to Sell ALL or Sell to
cover which is not available in the case of direct issuance. In Sell All, the entire sale
proceeds net of payables like exercise price, taxes, transaction charges are
remitted to the employees’ bank account. In Sell to Cover,
only that portion of shares is sold to cover the exercise price, taxes, and
transaction charges and rest of the shares are transferred to the D-mat account
of the employees
·
In case of Trust, there is no need for any
further issuance of new shares as trust can acquire the shares from the
secondary market and hence there is no more dilution of holding.
·
The process under trust is much simple as
compare to direct issuance.
·
However, in case of listed companies there is a
cap of 5% of Equity capital.
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