Final answer:
If a participant in an S Corp ESOP demands a stock distribution, it means they are requesting to receive shares of stock from the ESOP. The impact of this demand will depend on the availability of stock in the ESOP and the specific rules and policies of the plan.
Step-by-step explanation:
An S Corporation Employee Stock Ownership Plan (ESOP) is a retirement benefit that allows employees to become owners of company stock. If a participant in an S Corp ESOP demands a stock distribution, it means they are requesting to receive shares of stock from the ESOP. The impact of this demand will depend on the availability of stock in the ESOP and the specific rules and policies of the plan.
If there is enough stock available, the participant can receive the requested shares. This may reduce the overall value of the ESOP for other participants, as the total number of shares in the plan will decrease. It may also impact the voting rights and control of the company, as the participant will have ownership in the form of shares.
On the other hand, if there is limited stock available in the ESOP, the participant may not be able to receive the full amount of shares they requested. The plan administrator will need to determine how to allocate the available shares among participants.