Which of these is correct with reference to ldquo Sweat equity shares rdquo ........

Economic Affairs Financial Markets

Which of these is correct with reference to “Sweat equity shares”?

They are issued in the Initial Public offer (IPO) by Public Sector Enterprises

They are issued by a Company to its employees in view of their intellectual property rights made available to the company

They are ordinary shares purchasable only by informal sector employees or casual labour

They are issued by the banks for debt restructuring of a company to pay off a non-performing asset (NPA)

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Explanation:

These are such equity shares, which 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.
The Ministry of Corporate Affairs vide a 2016 notification has amended Companies (Share Capital and Debentures) Rules, 2014 to allow a startup company to issue sweat equity shares not exceeding fifty per cent of its paid up capital upto five years from the date of its incorporation or registration.