Asif Khan (Taxation executive) (410 Points)
18 December 2009dear friends
what is the procedure for issuing sweat equity shares to the employees. does the company have to file some form to ROC. Can the company issue sweat eq shares to its ex employees.
pls help
CS. Ashish Shah
(Service)
(175 Points)
Replied 03 February 2010
Dear Asif,
According to the provisions of Section 79A of the Companies Act, 1956, a Company may issue sweat equity shares of a class of shares already issued, if the following conditions are satisfied:
a) such issue is authorised by a special resolution by the Company in the General Meeting;
b) 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;
c) such issue is made after expiry of one year from the date on which the company was entitled to commence its business;
For private limited companies, the Govt. has formed Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003. So look in the rule, you will find ur answer.
Further Sweat Equity cannot be given to Ex-employees as it is ment for the present employees only.
You will need to file e-Form 23 with MCA as you have to pass a Special resolution in General Meeting for granting sweat equity.
CAclubindia
