Sweat equity to Director or Employee

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Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2010 Dear All,

Is there any other restriction on issuance of sweat equity share to Directors/Employee
apart from below two?

1. Atleast one year has elapsed since the date of Commencement of Business by Company before issue of Sweat equity shares.

2. The company shall not issue sweat equity shares for more than 15% of total paid up equity share capital in a year or shares of the value of 5 crores of rupees, whichever is higher except with the prior approval of the Central Government in Form 65.

I will be oblized if any body can explain point 2 with an example.

Regds,

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)

02 January 2011 Issue of Sweat Equity Shares to Promoters.
6. (1) In case of Issue of sweat equity shares to promoters, the same shall also be
approved by simple majority of the shareholders in General Meeting;
Provided that for passing such resolution, voting through postal ballot as specified
under Companies (Passing of the resolution by Postal Ballot) Rules, 2001 shall also
be adopted;
Provided further that the promoters to whom such Sweat Equity Shares are proposed
to be issued shall not participate in such resolution.
(2) Each transaction of issue of Sweat Equity shall be voted by a separate
resolution.
(3) The resolution for issue of Sweat Equity shall be valid for a period of not more
than twelve months from the date of passing of the resolution.
(3) For the purposes of passing the resolution, the explanatory statement shall contain
the disclosures as specified in the Schedule.

for more detail lg on www.sebi.gov.in

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