SWEAT EQUITY

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02 August 2010 WHAT ARE THE CONDITION TO ISSUE SWEAT EQUITY?

CA Sanat Pyne

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02 August 2010 : A company may issue sweat equity shares of a class of shares already issued if the following conditions are fulfilled , namely : (a) the issue of sweat equity shares in authorized by a special resolution passed by the company in the general meeting. (b) The resolution specifies the number of shares, current market price, consideration, if any, and the class or classes of directors or employees to whom such equity shares are to be issued. (c) not less than one year has, at the issue elapsed since the date on which the company was entitled to commence business. (d) The sweat equity shares of a company whose equity shares are listed on a recognized stock exchange are issued in accordance with the regulations made by the Securities and Exchange Board of India in this behalf. (e) In view of the above provisions, you can't issue Sweat Equity at the time of incorporation of your Company as one year has not elapsed since the date on which the company was entitled to commence business. Consequently, you can issue sweat equity shares only after the period of one year since incorporation.