Skip to content

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

Kaveri Textiles Ltd is listed on a recognised stock exchange and wishes to issue sweat equity shares to its employees. Under Section 54(1)(d), how must the issue be made?

A listed company must issue sweat equity shares in accordance with the regulations made by SEBI. Section 54(1)(d) provides this. Unlisted companies follow the prescribed rules instead, so the listing status decides which framework governs the issue.

  1. AIn accordance with rules prescribed under the Companies Act for unlisted companies
  2. BIn accordance with the regulations made by the Securities and Exchange Board in this behalfCorrect
  3. CIn accordance with the company's articles alone, without any regulations
  4. DIn accordance with the directions of the Registrar of Companies

Explanation

Section 54(1)(d) says that where equity shares are listed, sweat equity shares must be issued in accordance with the SEBI regulations. The prescribed rules apply to unlisted companies, so option A describes the wrong category.

Did you get it right without looking?

One question tells you little. A timed set on Share Based Employee Benefits and Sweat Equity shows your real accuracy, how long you take and where you lose marks.

Practise Share Based Employee Benefits and Sweat EquityFree diagnostic mock

More Share Based Employee Benefits and Sweat Equity questions