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Sweat Equity and Employee Stock Options Research Team | Posted On Tuesday, April 14,2009, 05:14 PM

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Sweat Equity and Employee Stock Options



Sweat Equity Shares mean equity shares issued by the company to its directors and / or employees at a reduction 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 :

  • A special resolution to the effect is passed at a general meeting of the company.
  • 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.
  • Minimum 1 year has passed since the date on which the company became entitled to commence business.
  • 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 prescribed regulations are complied with.

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