What are sweat equity shares?

1.	What are sweat equity shares?
Answer» Sweat equity shares are equity shares issued by a company to its employees or directors at a discount, or as a consideration for providing know-how or a similar value to the company. A company may issue sweat equity shares of a class of shares already issued if these conditions are met: The issue of sweat equity’ shares should be authorised by a special resolution passed by the company in a general meeting. The resolution should specify the number of shares, current market price, consideration if any, and the section of directors/employees to whom they are to be issued. As on the date of issue, a year should have elapsed since the company was entitled to commence business.

Answer»

Sweat equity shares are equity shares issued by a company to its employees or directors at a discount, or as a consideration for providing know-how or a similar value to the company.

A company may issue sweat equity shares of a class of shares already issued if these conditions are met:

The issue of sweat equity’ shares should be authorised by a special resolution passed by the company in a general meeting. The resolution should specify the number of shares, current market price, consideration if any, and the section of directors/employees to whom they are to be issued. As on the date of issue, a year should have elapsed since the company was entitled to commence business.

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