TMI BlogUnlisted Companies (Issue of Sweat Equity Shares) Rules, 2003X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 physical substance, held for use in the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accordance with the Accounting Standards specified by the Institute of Chartered Accountants of India. (2) Approval of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 ) the valuer shall consult such experts as he may deem fit, having regard to the nature of the industry and the nature of the property or the value addition; ( c ) the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as provided in the relevant accounting standards. (2) In respect of sweat equity shares issued during accounting period, the accounting value of sweat equity shares shall be treated as another form of compensation to the employee or the direc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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