Looking for what is sweat equity shares in the company as per class 12 syllabus of CBSE, ISC, and State Boards.
Sweat Equity shares topic is concerned with Accounting for share capital chapter of accountancy class 12
Let’s Explain it
What do you mean by Sweat Equity Shares in a company (class 12)
As per section 54 of the Companies Act, 2013, a company may issue sweat equity shares.
Sweat equity shares refer to the shares issued by the company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available intellectual property rights.
Sweat equity shares can not be resold by the shareholders within a period of 3 years, This period is called the lock-in period.
Why sweat equity shares are issued.
Such shares are exclusively issued by the company to its talented employees and directors. If company fees that an employee is needed in the company.
In order to make him stay longer, the company issues its shares to such employees at a heavy discount.
In this whole process, an employee having shares of the company where he is working, feel his own and work and hard for the company and stay for long.