Can equity shares be issued at discount?
As per companies Act 2013, a company shall not issue shares at a discount except as provided in section 54 for issue of sweat equity shares. Any share issued by a company at a discounted price shall be void.
Can we issue sweat equity at discount?
A registered valuer assesses the value at a fair price for the sweat equity shares. He evaluates and determines the value of know-how, of value additions, of intellectual property rights or any consideration. As against know-how, the shares may be issued at a discounted price or even free.
Which type of shares can be issued at discount?
It clearly prohibits the issue of shares at discount as it states in its clause (2) that any share (which means either equity share or preference share) issued by a company at a discounted price shall be void.
Can sweat equity shares be issued at par?
Sweat equity shares can only be issued by a company to its Directors or Employees, at a discount or for a consideration other than cash, for their providing of know-how or creation of intellectual property rights like trademark, patent, copyright or value additions.
Can shares be issued below face value?
Accordingly, no company can issue share below the nominal value except Sweat Equity Shares even if the market value of the share is below the nominal value of the share.
Which condition is not relevant for issue of sweat equity shares?
Limit on quantum of issue
The company shall not issue sweat equity shares for more than 15 percent of the existing paid up equity share capital in a year or shares of the issue value of Rs. 5 crores, whichever is higher.
What is meant by sweat equity share 12?
Sweat equity are shares issued to employees or directors of a company at reduced rate. They are issued for consideration other than cash for such as technical know how or intellectual property. … Sweat equity shares should belong to a class of shares already issued.
What is the difference between shares issued at premium and shares issued at discount?
A limited company may issue the shares on following different terms. … Issue of Shares at par i.e. at face value or at nominal value. Issue of Shares at Premium i.e. at more than face value. Issue of Shares at Discount i.e. at less than the face value.
Under which condition company can issue share at discount?
A company can issue shares at discount atleast after one year from the date of commencing business. 5. If a company wants to issue shares at discount, then it must issue them within two months of obtaining sanction from the Company Law Tribunal.
Why is issuing shares at discount illegal?
Discounted prices may be offered when company is not able to pay its debts and offering it share to its creditors. Company Act 2013 strictly prohibited the companies to issue shares at discounted price. It invites penalty and imprisonment for directors. … So never think of discounted price.