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Sweat Equity

S Kadam (13 Points)

10 May 2007

Hi My question is can a company be formed using one promotor sweat Partner with no cash outflow towards equity contribution. The co will be pvt ltd. with autho capital of 10 lacs 100% paid up at the formation.

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3 Replies

Som (112 Points)
Replied 10 May 2007

Yes. It can be formaed.

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Go (22 Points)
Replied 10 May 2007

the minimum number of members has to be 2 in case of a private ltd. company, in the given case it is not clear whether the all the share capital has been issued to a single promoter. i don't agree with "som", for a company which is just in the process of being incorporated can issue of sweat equity share. since the purpose of issuing sweat equity shares is to reward the employees and directors for their brain and expertise. also sweat equity shares cannot be issued to the promoters, unless that person is also a director of the company.

Som (112 Points)
Replied 10 May 2007

Dear Goutam,

As the question is very cear as only one promoter is given and in no case all the contribution can be given by one person the other have to take a few shares. My opinion is very clear as i hv done it practically.

regds