sweat equity shares
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
18 January 2011
can a listed co. issue sweat eq. shares to its promoters???
19 January 2011
No a company cannot issue sweat euity Shares to its Promters...As laid under provision of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
19 January 2011
no.
Querist : Anonymous
Querist :
Anonymous
(Querist)
21 January 2011
thnx
but sweat eq. shares r diff. from ESOS or ESOP as it is governed u/s 79A.
Plz rectify if m wrong
but sweat eq. shares r diff. from ESOS or ESOP as it is governed u/s 79A.
Plz rectify if m wrong
21 January 2011
"Employee Stock Option Scheme and Employee Stock Purchase Scheme" comes under SEBI guidelines and Sweat Equity comes under sec 79A of Companies Act..u rightly said,
In other way you can assume both ESOS,ESOP & Sweat Equity are same bcoz SEBI in order to control illegal dillution of public capital, comes out with a tool called ESOP- ESOS to control distribution of funds in the name of "Sweat Equity Shares".
In other way you can assume both ESOS,ESOP & Sweat Equity are same bcoz SEBI in order to control illegal dillution of public capital, comes out with a tool called ESOP- ESOS to control distribution of funds in the name of "Sweat Equity Shares".
26 July 2025
Can a listed company issue sweat equity shares to its promoters?
Short answer:
Yes, a listed company can issue sweat equity shares to its promoters, but only subject to strict compliance with the Companies Act, SEBI (Listing Obligations and Disclosure Requirements) Regulations, and other applicable laws.
Key points to consider:
Companies Act, 2013 (Section 54):
Sweat equity shares are shares issued by a company to its directors or employees at a discount or for consideration other than cash, for providing know-how or making available rights in intellectual property or value additions.
Promoters who are also directors or employees of the company can receive sweat equity shares.
Sweat equity shares cannot be issued to promoters who are not directors or employees.
SEBI Regulations for Listed Companies:
Sweat equity shares issuance by listed companies is subject to SEBI (Issue of Sweat Equity) Regulations, 2002.
Approval from the shareholders via a special resolution at a general meeting is mandatory.
The price of sweat equity shares shall be determined by a registered valuer.
Disclosures in the prospectus, explanatory statement, and compliance with continuous disclosure obligations under SEBI Listing Regulations are necessary.
Other Conditions:
The company should have been in existence for at least 1 year.
Sweat equity shares can only be issued to persons who have been working with the company for at least one year or are about to provide know-how or value addition.
Summary:
Yes, promoters who are also directors or employees can be issued sweat equity shares.
The process requires strict compliance with law, shareholder approval, valuation, and disclosures.
Short answer:
Yes, a listed company can issue sweat equity shares to its promoters, but only subject to strict compliance with the Companies Act, SEBI (Listing Obligations and Disclosure Requirements) Regulations, and other applicable laws.
Key points to consider:
Companies Act, 2013 (Section 54):
Sweat equity shares are shares issued by a company to its directors or employees at a discount or for consideration other than cash, for providing know-how or making available rights in intellectual property or value additions.
Promoters who are also directors or employees of the company can receive sweat equity shares.
Sweat equity shares cannot be issued to promoters who are not directors or employees.
SEBI Regulations for Listed Companies:
Sweat equity shares issuance by listed companies is subject to SEBI (Issue of Sweat Equity) Regulations, 2002.
Approval from the shareholders via a special resolution at a general meeting is mandatory.
The price of sweat equity shares shall be determined by a registered valuer.
Disclosures in the prospectus, explanatory statement, and compliance with continuous disclosure obligations under SEBI Listing Regulations are necessary.
Other Conditions:
The company should have been in existence for at least 1 year.
Sweat equity shares can only be issued to persons who have been working with the company for at least one year or are about to provide know-how or value addition.
Summary:
Yes, promoters who are also directors or employees can be issued sweat equity shares.
The process requires strict compliance with law, shareholder approval, valuation, and disclosures.
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