Rule 8 - Issue of sweat equity shares.

Issuance of sweat equity shares requires special resolution, registered valuer valuation, lock in and prescribed disclosures.

A company must obtain a special resolution to issue sweat equity shares to directors or employees for know how, intellectual property rights or value additions for consideration other than cash. The explanatory statement must include board approval date, justification, class and number of shares, recipient categories, valuation basis and pricing, names and relationships of allottees, consideration, impact on managerial remuneration, and diluted EPS. Sweat equity requires valuation by a registered valuer, a gist of the valuation must accompany the meeting notice, shares carry a three year lock-in, and specified accounting and disclosure treatments apply.