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Sweat Equity Shares

Sweat Equity Shares

Definition/Meaning

“Sweat Equity Shares” means equity shares issued by the company to employees or directors at a discount or for consideration other than cash for providing know how or making available rights in the nature of intellectual property rights or value additions, by whatever name called. (Section 79A of the Companies Act, 1956 permits a company to issue sweat equity shares of a company subject to the guidelines to be issued in this regard.)

Conditions

·         Such issue is authorised by a special resolution of the company in the general meeting

·         Such resolution specifies the number of shares, current market price, consideration, if any, and the class or classes of the directors or employees to whom such shares are to be issued

·         Such issue is after an expiry of one year from the date on which the company was entitled to commence business.

Price of sweat equity share

The price of sweat equity shares shall be at a fair price calculated by an independent valuer. 

Ceiling Limit

The total sweat equity shares issued during the year should not exceed 15% of the total paid-up equity share capital in a year or shares of the value of Rs.5 crores of rupees.

Lock-in period

The shares shall be locked in for a period of 3 years from the date of allotment.

Comments
 S GHOSH May 2, 2011
who can be an independent valuer for fair price of sweat equity shares. provide me few significant name of independent valuer with their contact number to my email
 bhagyashree June 16, 2011
what is the implicatio of issuing sweat equity shares to a non resident under FEMA
 smita February 3, 2012
available rights in the nature of intellectual property rights or value additions means?
 MVS Ramani February 9, 2012
Sweat Equity Shares can be utilised to increase Bank Guarantee
silpa January 8, 2013
Whether a public company having share capital of 500000 can indulge in issue of sweat equity shares?
silpa January 8, 2013
Is there any limit of paid up capital is required to issue of sweat equity shares in respect of all private company?
silpa January 8, 2013
Whether all companies can issue sweat equity shares?
silpa January 8, 2013
Whether all companies can issue sweat equity shares?
s.kanaga April 9, 2013
good
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