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“The earlier lecture. I said that chasse cannot be issued at discount and if it it should be issued at this coordinate. It is only for sweat equity shares. So is with equis dishes sweat equity shares are those shares which are basically issued to either the employees of the company okay or they are issued to the directors of the company so sweat equity shares are those shares.
Which are either issued to the employees or directors of the companies at discount. So you issue them at discount or it may be for consideration other than cash. I mean you don t collect cash. But for some other reason you issue the security or this shell.
So what are the possible reasons. Where you issue share for consideration..
Other than cash. Number. One probably that employee is contributing to the technical. Know how of the business.
Okay so for the technical. Know how you are making the consideration in the form of shares other than cash or you are going to issue shares for the intellectual property of the employee or of the director. Okay or it may be for some other reason. But he is making value addition to the organization so you are measuring shares for consideration other than cash so understand sweat equity shares are those shares which are issued to the employees or directors at discount or for consideration.
Other than cash for items like technical. Know how intellectual property or value additions section..
54 of companies act. 2013. Lays out the conditions. Which have to be complied okay so only if you comply with those condition.
You can go for issue. A sweat equity. Sure so what are those condition number. One it says.
This issue of sweat equity share. Should be authorized by a special resolution of board of directors..
Okay so there should be a special resolution by board of directors and in that special resolution. How many shares have to be issued that is number of shares. What is the current market price okay. And what is the consideration whether it is cash or is it for any other form.
What is the consideration and who are the class of employees who are eligible for this sweat. Equity sheis. So everything should be mentioned in the special resolution. And it should be authorized in that effort.
So that is the requirement number one in section. 54..
Then there is a second requirement that is if a company is issuing sweat equity. Share. It should have lapsed a minimum of one year. That is the age of the company should be at least one year.
Okay and if it is a listed company. Okay if the company is a listed company then in addition to this section 54. They have to comply with the requirements of stock exchange s so that is more important okay now since they are getting the shares in a different way or for a lesser consideration whether the rights of sweat equity shareholders or lessor or whether they are affected answer is no the rights of the sweat equity shareholders will rank pari passu with the rights of the other shareholders. I mean they re also just like another ” .
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