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Sweat Equity Shares mean equity shares issued by the company to its directors and / or employees at a discount or for consideration other than cash for providing know how or making available the rights in the nature of intellectual property rights or value additions.

A company may issue sweat equity shares of a class of shares already issued if the following conditions are fulfilled :-

1.A special resolution to the effect is passed at a general meeting of the company

2.The resolution specifies the number of shares, the current market price, consideration, if any, and the class of employees to whom the shares are to be issued

3.At least 1 year has passed since the date on which the company became eligible to commence business.

4.In case of issue of such shares by a listed company, the Sweat Equity Shares are listed on a recognized stock exchange in accordance with SEBI regulations and where the company is not listed on any stock exchange, the the prescribed rules are complied with.



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