Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003

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.... 1. (1) These Rules may be called the Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003. (2) They shall come into force on the date of their publication in the Official Gazette. Definitions. 2. In these rules, unless otherwise defined,-    (i)  "Asset" means a resource controlled by the company and from which future economic benefits are expected to flow to the company;   (ii)  "employee" means :-   (a)  a permanent employee of the company working in India or out of India; or   (b)  a director of the company, employed as a whole-time director or executive director of a company; (iii)  "intangible Asset" means an identifiable non-monetary asset, without ph....

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....s, consideration for such shares and the class or classes of persons to whom such equity shares are to be issued; (iv)  the value of the sweat equity shares along with valuation report/basis of valuation and the price at the which the sweat equity shares will be issued;   (v)  the names of persons to whom the equity will be issued and the person's relationship with the company; (vi)  ceiling on managerial remuneration, if any, which will be affected by issuance of such equity; (vii)  a statement to the effect that the company shall conform to the accounting policies specified by the Central Government; and (viii) diluted earning per share pursuant to the issue of securities to be calculated in accorda....

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....d to the company from the issue of sweat equity shares;   (f)  diluted Earnings Per Share (EPS) pursuant to issuance of sweat equity shares. Pricing of Sweat Equity Shares. 8. The price of sweat equity shares to be issued to employees and directors shall be at a fair price calculated by an independent valuer. Issue of Sweat Equity Shares for consideration other than cash. 9. Where a company proposes to issue sweat equity shares for consideration other than cash, it shall comply with following :   (a)  the valuation of the intellectual property or of the know-how provided or other value addition to consideration at which sweat equity capital is issued, shall be carried out by a valuer;   (b)&nbsp....

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....place before the shareholders a certificate from the auditors of the company/practising company secretary that sweat equity shares have been allotted in accordance with the resolution of the company in the general meeting and these Rules. Accounting policies 12. (1) Where the sweat equity shares are issued for a non-cash consideration, such non-cash consideration shall be treated in the following manner in the books of account of the company :   (a)  where the non-cash consideration takes the form of a depreciable or amortizable asset, it shall be carried to the balance sheet of the company in accordance with the relevant accounting standards; or   (b)  where clause (a) is not applicable, it shall be expensed....