ISSUE OF SWEAT EQUITY SHARES [Effective from 1st April, 2014] (1) Notwithstanding anything contained in section 53, a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely:— (a) the issue is authorised by a special resolution passed by the company; (b) the… The Sweat Equity Shares are non-transferable and are in lock-in period for a period of 3 years from the date of allotment. Financial Management MCQs (Multiple Choice Questions and Answers) Also Useful for NT…, 1. Sweat Equity Shares, Explanation: As per the Companies Act, 2013, A company cannot issue its shares at discount except sweat equity shares. “Sweat Equity Shares” means such equity shares as are issued by the Company to its Directors or Employees at a discount or for consideration, other than cash, for providing their know-how or making available rights in the nature of intellectual property rights or value additions, Q4. Moreover, a Sweat Equity Share Contract is necessary to prevent conflicts, especially for businesses with many partners. To pay the individuals who contributed the sweat equity, the share price or unit value of the company is multiplied by the monetary amount for the labor performed to get the sweat equity value for that person. In this video we will learn about the meaning and provisions regarding issue of Sweat Equity Shares under Companies Act 2013. If you want a shareholder to hold shares then an existing shareholder can transfer some of his or her shares or new shares could be allotted. What is the lock-in period of Sweat Equity Shares? 1 crore. vaibhav chauhan on. Even so, the issuance of such shares cannot exceed 25% of the paid-up capital of the company at any time. It does not matter if such companies are private by its articles. As per Section 2(88) of the Companies Act, 2013, Sweat Equity Shares are the shares issued by the company to its Director or employee at a discount or for consideration other than cash, for providing know-how or making available like intellectual property rights or value addition.. Who are eligible for Sweat equity Shares? December – 2019 Edition. 8. Equity share and Preference share are the two types of share that a company issues. Sweat Equity Shares are issue to _____? Which among the following is type of share issued to existing shareholders to increase its subscribed share capital? Q1. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 7 Issue of Shares. Answer: (2) It’s a part ownership of the business and will stay forever unless the employee decided to sell his sweat equity share. The term employee has not been defined under the 2013 Act. The company can use the Capital Redemption Reserve to issue the fully paid-up bonus shares. August – 2020 Edition If a company violates the provisions of Section 33 of Companies Act 2013, it shall be punishable with a fine of fifty thousand rupees for each default. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 7 Issue of Shares. Equity share is an ordinary share. Q3. Answer: (4) June – 2020 Edition Sweat Equity Shares issued at a discount must belong to a class of shares already issued. Sweat Equity is a new equity instrument which was floated in the Companies (Amendment) ordinance 1998 (u/s 79A of the companies act 1956. Which of the following capital is not shown in company’s balance sheet? Which law defines Sweat Equity Shares? Issue of Sweat Equity Shares According to section 2(88), sweat equity shares mean such equity shares issued by a company to its directors or employees at a discount or for consideration, other than cash for providing their know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called. Q7. If a company violates the Section 33 of Companies Act related to Abridged Prospectus, then it shall be punishable with fine of _________? Preference share experience the perquisites of the dividend distribution first. Answer: (4) Which among the following is type of share issued to existing shareholders without receipt of any consideration from shareholders for issuance of such shares? QUESTION: 13. A company may issue preference shares for a period exceeding twenty years for infrastructure projects. QUANTUM OF SWEAT EQUITY SHARE. Match the following: Minimum number of members in. This contains 20 Multiple Choice Questions for Commerce Test: Company Accounts Issue Of Shares - 2 (mcq) to study with solutions a complete question bank. Amount to be transferred to share forfeiture A/c= 7,200(800 x 9) – 2,400(800 x 3)= Rs. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Sweat equity is a form of income. Answer: (3) Answer: (2) 5%; 10%; 15%; 20%; Answer: (3) The Company shall not issue Sweat Equity Shares for more than 15% of existing paid-up share capital or issue value of shares Rs.5,00,00,000/- (Rupees Five Crores), whichever is higher. A sweat equity shares contract is a legal document signed by the shareholders that guarantee their equity rights. 16. As per Companies Act 2013, what is maximum tenure of preference shares except for infrastructure projects? 13. Answer: (2) The Company shall not issue Sweat Equity Shares for more than _____ of existing paid-up share capital at one-time. Disbursement of sweat equity: In a year, the sweat equity shares cannot account for more than 15% of the existing paid up equity share capital or shares having issue value of rupees 5 crores, whichever is higher. Q6. Q4. 2. Answer: (3) The Company shall not issue Sweat Equity Shares for more than 15% of existing paid-up share capital or issue value of shares Rs.5,00,00,000/- (Rupees Five Crores), whichever is higher. Thus, sweat equity shares denote stocks that companies issue to reward such contributions. A company grants ESOPs to its employees for buying a specified number of shares of the company at a defined price after the option period (a certain number of years), Click to go to SEBI Grade A Preparation Page, Tags: Companies Act MCQ Part 4, Companies Act MCQ Part 4 Quiz, September – 2020 Edition Dynamic Tutorials and Services is a Leading Coaching Centre of Tinsukia District. 18. For example, Bob receives $100 dollars in sweat equity from ABC Corp. Bob is required to pay taxes on the value of sweat equity received ($100 dollars) as earned income. February – 2020 Edition But sweat equity once paid can’t lapse. 4,800 Amount to be transferred to Capital Reserve A/c= 9,600(12 x 800) – 4,800(Amount of share forfeiture)= Rs. Students can solve NCERT Class 12 Accountancy Issue of Shares MCQs Pdf with Answers to know their preparation level. We provide complete coaching for Commerece and Arts stream from Class 12 to Master Degree level. Sweat Equity Taxability. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. [Public] [Private] [Employee] [All of above] 8 people answered this MCQ question is the answer among Public,Private,Employee,All of above for the mcq Sweat equity shares are issued to SECTION 54. of the nominal amount of the security, Answer: (1) Importance of Sweat Equity. Difference between Equity Shares and Preference Shares. (a) Special resolution (b) Ordinary resolution (c) Unanimous resolution (d) None of these Ans. Only sweat equity shares can be issued at a discount. 4,800 5 crore; whichever is less. 9. Get all latest content delivered straight to your inbox. It refers to the shares issued at discount to the employees and directors and shares issued for consideration other that cash for providing intellectual property rights, know how , value additions to the company or similar contributions. An ESOP (Employee stock ownership plan) refers to an employee benefit plan which offers employees an ownership interest in the organization. Match the following with relevant sections: 6. Objective Questions on Company Law with Answers: Question: A company to issue sweat equity shares must pass a. 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