The correct answer is (d). Sweat equity shares are issued to employees of the company.
Sweat equity shares are a type of equity share that is issued to employees in recognition of their contributions to the company. They are usually issued at a discount to the market value of the shares, and they can be used to attract and retain top talent.
Sweat equity shares can be a valuable tool for companies that want to reward their employees and motivate them to achieve long-term goals. However, they should be used carefully, as they can also create dilution for existing shareholders.
Here is a brief explanation of each option:
(a) Ordinary shareholders are the owners of a company. They have the right to vote on matters such as the election of directors and the approval of major transactions. They also have the right to receive dividends, if any are declared.
(b) Preference shareholders are a type of shareholder who have a preference over ordinary shareholders in terms of dividends and capital repayment. This means that they must be paid a dividend before ordinary shareholders, and they must be repaid their capital before ordinary shareholders if the company is wound up.
(c) Both (a) and (b) is not the correct answer, as sweat equity shares are not issued to ordinary shareholders or preference shareholders.
(d) Employees of the company is the correct answer, as sweat equity shares are issued to employees in recognition of their contributions to the company.