ESOP need not be new stock issue, it depends on how the company wants to structure the scheme. In accounting terms either new shares or purchase of existing for ESOP trust, both have similar accounting costs, cash flow might be different. Advantage of purchase from market is, existing shareholding is not diluted, also acts like a limited time buyback, since the ESOP shares are taken out of market for sometime, thereby reducing liquidity and giving some minor price support…
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