Suyog S Kabra

Indicative List Of Documents To Be Checked

  • Minutes of Board meeting
  • Resolution with Explanatory Statement
  • Minutes of General meeting
  • Approval of Registration from sectoral regulators such as RBI, SEBI, etc.
  • Valuation Report
  • Board Report
  • INC 21, SH-3
  • PAS -3, MGT -14

CHECKLIST FOR SWEAT EQUITY SHARES

Sr. No. Particulars
1 Section 2(88) defines “Sweat Equity Shares” so as to mean 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
2 In case of listed company, ensure that the issue of Swear Equity Shares is in compliance with SEBI(Issue of Sweat Equity) Regulations, 2002
In case of unlisted company
3 The issue is authorized by as special resolution passed by the company, ensuring that the special resolution authorizing the same is valid for making the allotment within a period of twelve months from the date of passing of special resolution.
4 Explanatory statement to be annexed to the notice of general meeting contains the specified particulars (Rule 8 of Companies (share capital and Debenture) Rules 2014
5 Not less than one year has, at the date of such issue, elapsed since the date on which the company had commenced business
6 The company has not issued sweat equity shares for more that fifteen percentage of the existing paid up equity share capital in year or shares of the issue value of rupees five crores, whichever is higher. Further it is to be ensured that the issuance of sweat equity shares in the company has not exceeded twenty five percent of the paid up equity capital of the company at any time.
7 The sweat equity shares to be issued are valued at a price determined by the registered valuer
8 The Swear Equity Shares issued are locked in / non transferable for a period of three years from the date of allotment. The fact and the period of lock in is stamped in bold on such share certificate
9 The amount of Swear Equity Shares issued is included as a part of managerial remuneration while calculation the limits.

Details as per Rule 8(13) of Companies (Share Capital and Debentures) Rules 2014 of the swear Equity shares are mentioned in Director’s Report

10 The Company is maintaining Register of Swear Equity Shares in Form No. SH 3
11 The register of Sweat Equity Shares is maintained at the registered office of the company or such other place at the Board may decide
12 The Entries in the register are authenticated by the company secretary of the company or by any other person authorized by the Board for the purpose.

(Suyog S Kabra is  partner with White Collar Legal LLP and can be reached at whitecollarlegal@gmail.com)

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Tags : Companies Act (1934) Companies Act 2013 (1706) Suyog Kabra (16)

One response to “Checklist for SWEAT Equity Shares Under Companies Act, 2013”

  1. Abhishek says:

    A Company issued Sweat Equity Shares in year 2006 to the employee of the company with in lock in period of 5 years.
    After that company made a Employee welfare trust for transferring the Equity Shares of the Employee who resigned the company before completion of Lock in period.
    now company wants to transfer these shares to existing employees of the company.
    How please explain

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