- Meaning: The company issue share to their directors, professional experts, employees with discount or without consideration of cash are known as sweat equity share. Usually these shares are offered at price lower than that prevailing in market price.
- Provisions as per Company Act for Sweat Equity Share:
1. In a general meeting special resolution is to be resolved.
2. In this resolutions particulars regarding share, present value of share, to whom it is to be issued - directors, employee is stated.
3. While issuing such share legal provisions should be followed and it is to be registered with stock exchange observing rules and regulations.
4. The public limited company can issue such share within one year of passing special resolution.
5. Usually such shares are not transferable for three years.
6. The company can’t issue more than 15% of its paid up capital or worth five crore in a year. Moreover, the company can’t issue more than 25% of total capital.