Definition of Sweat Equity Share [Section 2(88)]: –
Applicable Provisions: –
|Section 54(1)||Issue of shares||Only a class of shares already issued.|
|Section 54 (1) (a)||Shareholders’ Approval||By Special Resolution.
Note: – SR shall be valid for a period of not more than 12 months from the date of passing of SR [Rule 8(3)]
|Section 54 (1) (b)||Contents of SR||
|Section 54 (1) (c)||Time Limit||Can be issued only after one year from the date of commencement of business|
|Section 54 (1) (d)||Listed shares||SEBI regulations to be followed.|
|A||Employee||Permanent employee of the Company, working in India or outside, for at least one year.|
|B||Director||Whether a WTD or not|
|C||Employee or a Director as defined in (A) or (B)||Of a subsidiary, in India or outside India, or of a holding company of the Company|
Value Addition: –
Benefit derived or to be derived from an expert or professional for providing: –
Disclosures in Explanatory Statement [Rule 8(2)]: –
|[Rule 8(4)]||Limit on Sweat equity shares
|Issue of sweat equity shares in a year shall not exceed: –
Provided that Issue of sweat equity shares should not exceed 25% of the paid up equity capital of the Company at any time.
|[Rule 8(5)]||Lock in Period||Lock in period/ Non transferable period- three years from the date of allotment.
The fact that the share certificates are under lock-in and the period of expiry of lock in shall be mentioned in prominent manner on share certificate.
|[Rule 8(6)]||Valuation of sweat equity shares||Price to be determined by Registered Valuer as the fair price.|
|[Rule 8(7) & 8]||Valuation of IPR/Know-how/Value Addition||Shall be carried out by Registered Valuer.
He shall provide a report to Directors with justification.
Copy of gist to be send to the shareholders.
|Rule 8(9)||Issued for non cash consideration||
|[Rule 8(10)]||Amount of sweat equity shares shall be treated as part of managerial remuneration for the purpose of section197 and 198, if following conditions are fulfilled: –||
|Rule 8(12)||Issued pursuant to acquisition of asset||
|Rule 8(13)||Disclosure in Directors Report||Particulars like class of director or employee, class of shares, number of sweat equity shares, percentage of sweat equity shares in total post issued and paid up share capital, diluted Earnings Per Share, consideration received.|
|Rule 8(14)||Register of Sweat Equity Shares||