what do you mean by sweat share?
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sweet equity share means such equity share are as issued by a company to its director or employersat a discount or four consideration other than cash for providing their know how they making available rights in the nature of intellectual property rights of value addition ,Buy whatever name called.
Sweat equity shares—overview
Produced in partnership with AMC Law Firm
Sweat equity shares means such equity shares as are issued by a company to its directors or employees at a discount or for consideration, other than cash, for providing their know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called. Such shares can only be issued to:
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a permanent employee of the company who has been working in India or outside India, for at least last one year; or
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to a director of the company, whether a whole time director or not; or
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an employee or a director mentioned above of a subsidiary, in India or outside India, or of a holding company of the company
Sweat equity shares are issued to the employees or directors in lieu of their contribution towards the development of the company. The issue of equity shares allows the company to retain the employees or directors by incentivizing them for their services. Companies Act, 2013, s 54 deals with issue of sweat equity shares which corresponds to section 79A of the Companies Act, 1956. The Notes on Clauses of the Companies Bill, 2011, explained this section as follows: “Clause 54—This clause corresponds to Companies Act, 1956, s 79A and seeks to provide that on fulfilling certain conditions, a company may issue sweat equity shares of a class of shares already issued. The rights, limitations, restrictions and provisions applicable to equity shares shall be applicable to sweat equity shares and holders of such shares rank pari passu with other equity shareholders.”