Is there any other restriction on issuance of sweat equity share to Directors/Employee apart from below two?
1. Atleast one year has elapsed since the date of Commencement of Business by Company before issue of Sweat equity shares.
2. The company shall not issue sweat equity shares for more than 15% of total paid up equity share capital in a year or shares of the value of 5 crores of rupees, whichever is higher except with the prior approval of the Central Government in Form 65.
I will be oblized if any body can explain point 2 with an example.
02 January 2011
Issue of Sweat Equity Shares to Promoters. 6. (1) In case of Issue of sweat equity shares to promoters, the same shall also be approved by simple majority of the shareholders in General Meeting; Provided that for passing such resolution, voting through postal ballot as specified under Companies (Passing of the resolution by Postal Ballot) Rules, 2001 shall also be adopted; Provided further that the promoters to whom such Sweat Equity Shares are proposed to be issued shall not participate in such resolution. (2) Each transaction of issue of Sweat Equity shall be voted by a separate resolution. (3) The resolution for issue of Sweat Equity shall be valid for a period of not more than twelve months from the date of passing of the resolution. (3) For the purposes of passing the resolution, the explanatory statement shall contain the disclosures as specified in the Schedule.
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