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Section 79A – The Companies Act,1956

The Companies Act, 1956

79A. Issue of sweat equity shares.

1[79A. Issue of sweat equity shares.(1) Notwithstanding anything contained in section 79, a company may issue sweat equity shares of a class of shares already issued if the following conditions are fulfilled, namely:

(a)the issue of sweat equity shares is authorised by a special resolution passed by the company in the general meeting;

(b)the resolution specifies the number of shares, 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)not less than one year has, at the date of the issue, elapsed since the date on which the company was entitled to commence business;

(d)the sweat equity shares of a company, whose equity shares are listed on a recognised stock exchange, are issued in accordance with the regulations made by the Securities and Exchange Board of India in this behalf:

Provided that in the case of a company whose equity shares are not listed on any recognised stock exchange, the sweat equity shares are issued in accordance with the guidelines as may be prescribed.

Explanation I.For the purposes of this sub-section, the expression “a company” means the company incorporated, formed and registered under this Act and includes its subsidiary company incorporated in a country outside India.

Explanation II.For the purposes of this Act, the expression “sweat equity shares” means equity shares issued by the company to employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called.

(2) All the limitations, restrictions and provisions relating to equity shares shall be applicable to such sweat equity shares issued under sub-section (1).]


1. Ins. by Act 21 of 1999, sec. 6 (w.r.e.f. 31-10-1998).

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The Companies Act, 1956

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