Can sweat equity shares be issued at discount?

Can equity shares be issued at discount?

A company cannot issue any shares at more than 10% discount. … The shares must belong to the same class of shares which are already available in the market. For example, if the has previously issued Equity shares then this time also, the company has to issue Equity shares only.

Can we issue sweat equity at discount?

A registered valuer assesses the value at a fair price for the sweat equity shares. He evaluates and determines the value of know-how, of value additions, of intellectual property rights or any consideration. As against know-how, the shares may be issued at a discounted price or even free.

Which shares Cannot be issued at a discount?

1) Except as provided in section 54, a company shall not issue shares at a discount. (2) Any share issued by a company at a discounted price discount shall be void.

What are the conditions for issue of sweat equity shares?

The company can issue sweat equity shares up to:

The Sweat Equity shares must be issued with a lock-in period of three years. The facts need to be mentioned, such as the shares are locked in along with the expiry of the lock-in period in the share certificate. The shares must be issued at a fair price.

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When can shares be issued at discount?

(iv) the shares to be issued at a discount are issued within two months after the date on which the issue is sanctioned by the 3 Company Law Board] or within such extended time as the 3 Company Law Board] may allow.

What type of equity shares can be issued at discount?

1. Sweat equity shares

  • These are issued by a Company to its Directors or Employees.
  • They can be issued at a discount or for consideration other than cash.

What are the reasons for issuing sweat equity?

Sweat equity shares are shares issued by a company to its employees or Directors, either at a discount or for consideration other than cash. Sweat equity shares are often issued for providing the know-how or creation of valuable intellectual property rights or key value additions to the company.

Can sweat equity shares be issued without consideration?

(i) the Sweat Equity shares are issued to any director or manager; and, (ii) they are issued for non-cash consideration, which does not take the form of an asset which can be carried to the balance sheet of the company in accordance with the relevant accounting standards.

Which shares can be sold at discount?

ADVERTISEMENTS: When Shares are issued at a price lower than their face value, they are said to have been issued at a discount. For example, if a share of Rs 100 is issued at Rs 95, then Rs 5 (i.e. Rs 100—95) is the amount of discount.

Why is issuing shares at discount illegal?

Discounted prices may be offered when company is not able to pay its debts and offering it share to its creditors. Company Act 2013 strictly prohibited the companies to issue shares at discounted price. It invites penalty and imprisonment for directors. … So never think of discounted price.

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Can shares be issued below face value?

Accordingly, no company can issue share below the nominal value except Sweat Equity Shares even if the market value of the share is below the nominal value of the share.