Section 54 of the Companies Act, 2013:- Issue of Sweat Equity Shares

(1) Notwithstanding anything contained in section 53, a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely: —

(a) the issue is authorised by a special resolution passed by the company;

(b) the resolution specifies the number of shares, the current market price, consideration, if any, and the class or classes of Directors or employees to whom such equity shares are to be issued;

(c) 3[Omitted]

(d) where the equity shares of the company are listed on a recognised stock exchange, the sweat equity shares are issued in accordance with the regulations made by the Securities and Exchange Board in this behalf and if they are not so listed, the sweat equity shares are issued in accordance with such rules as may be prescribed.

(2) The rights, limitations, restrictions and provisions as are for the time being applicable to equity shares shall be applicable to the sweat equity shares issued under this section and the holders of such shares shall rank pari passu with other equity shareholders.


3 . Omitted by the Companies (Amendment) Act, 2017 -Amendment Effective from 7th May 2018

Original Omitted Content – (c) not less than one year has, at the date of such issue, elapsed since the date on which the company had commenced business; and.

Exceptions/ Modifications/ Adaptations

1. In case of Specified IFSC Public Company. – Clause (c) of Sub-section (1) of section 54 shall not apply. – Notification Date 4th January, 2017

2. In case of Specified IFSC Private Company. – Clause (c) of sub section (1) of section 54 shall not apply. – Notification Date 4th January, 2017.