||Limit on Sweat equity shares
|Issue of sweat equity shares in a year shall not exceed: –
- 15% of the existing PSC or
- Shares of issue value of Rs. 5 crores, whoever is higher.
Provided that Issue of sweat equity shares should not exceed 25% of the paid up equity capital of the Company at any time.
||Lock in Period
||Lock in period/ Non transferable period- three years from the date of allotment.
The fact that the share certificates are under lock-in and the period of expiry of lock in shall be mentioned in prominent manner on share certificate.
||Valuation of sweat equity shares
||Price to be determined by Registered Valuer as the fair price.
|[Rule 8(7) & 8]
||Valuation of IPR/Know-how/Value Addition
||Shall be carried out by Registered Valuer.
He shall provide a report to Directors with justification.
Copy of gist to be send to the shareholders.
||Issued for non cash consideration
- Valuation report to be obtained from registered valuer,
- If it is depreciable or amortizable asset, it shall be carried to the balance sheet; or
- If above point is not applicable, it shall be expended as provided in accounting standard.
| [Rule 8(10)]
||Amount of sweat equity shares shall be treated as part of managerial remuneration for the purpose of section197 and 198, if following conditions are fulfilled: –
- If issued to any director or manager and
- If issued for consideration other than cash, it does not take the form of an asset which can be carried to the B/sheet in accordance with applicable AS.
||Issued pursuant to acquisition of asset
- Value to be determined by valuer.
||Disclosure in Directors Report
||Particulars like class of director or employee, class of shares, number of sweat equity shares, percentage of sweat equity shares in total post issued and paid up share capital, diluted Earnings Per Share, consideration received.
|| Register of Sweat Equity Shares
- Details of sweat shares shall be maintained in a Register (Form No. SH.3).
- Shall be maintained at Registered Office or such other place as the Board may decide.
- Entries shall be authenticated by CS of the Company or by any other person authorized by Board.