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CS Executive · Capital Market and Securities Laws · Share Based Employee Benefits and Sweat Equity

Beta Pharma Ltd is drafting a special resolution to issue sweat equity shares to its directors. Which particulars must the resolution specify under Section 54(1) of the Companies Act, 2013?

The special resolution must specify the number of shares, the current market price, the consideration if any, and the class or classes of directors or employees to whom the sweat equity shares will be issued. Other details such as dividend rates are not required by this clause.

  1. AOnly the number of shares and the name of the auditor valuing them
  2. BThe number of shares, the current market price, consideration if any, and the class or classes of directors or employees to whom they are issuedCorrect
  3. COnly the class of employees and the lock-in period
  4. DThe dividend rate and the voting rights attached to the shares

Explanation

Section 54(1)(b) lists the number of shares, the current market price, consideration if any, and the class or classes of directors or employees. The other options omit required items or add items not listed in that clause.

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