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of <h1>Unlisted companies can issue sweat equity shares to directors or employees under specific rules, capped at 25% overall.</h1> Under the Companies (Share Capital and Debentures) Rules, 2014, unlisted companies can issue sweat equity shares to directors or employees for non-cash consideration, such as intellectual property rights, if authorized by a special resolution. The issuance must comply with specific guidelines, including valuation by a registered valuer and disclosure in the Directors' Report. Sweat equity shares are capped at 15% of the paid-up equity capital annually, with a total limit of 25%. Startups may issue up to 50% within ten years of incorporation. Shares are non-transferable for three years, and detailed records must be maintained.
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