Which of the following is not true about an ESOP?
A)An ESOP will reduce the amount of voting stock in the hands of employees.
B)An ESOP must be a permanent trusted plan for the exclusive benefit of the employees.
C)The plan participants become eligible for favorable taxation of distributions from the plan.
D)Commercial lending institutions,insurance companies,and mutual funds are permitted an exclusion from income for 50% of the interest received on loans used to finance an ESOP's acquisition of company stock.
E)An ESOP may reduce the potential of an unfriendly takeover.

Question

Quizplus · Accepted Answer

An ESOP can actually increase the amount of voting stock in the hands of employees, as the plan can acquire shares of company stock to distribute to participants. This can give employees a stronger voice in corporate decisions.

Which of the Following Is Not True About an ESOP