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

Sagar Infra Ltd, a listed public company, plans to lend money directly to its employees so they can buy its fully paid-up shares, to be held by them beneficially. Under section 67(3)(c) as extracted, which employee can be given such a loan, and up to what limit?

Section 67(3)(c) allows loans to employees who are not directors or key managerial personnel, capped at six months' salary or wages, to buy fully paid-up shares to be held beneficially. Directors and KMP are excluded, and the loan cannot exceed that limit.

  1. AA whole-time director, up to one year's salary
  2. BA key managerial personnel, up to three months' salary
  3. CA non-director, non-KMP employee, up to six months' salary or wagesCorrect
  4. DAny employee including directors, without any monetary limit

Explanation

Section 67(3)(c) permits loans to persons in the company's employment other than its directors or key managerial personnel, for an amount not exceeding salary or wages for six months, to buy fully paid-up shares for beneficial ownership. Directors and KMP are excluded, and the cap exists, so the other options fail.

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