Now Start up Companies may Issue Sweat Equity not Exceeding 50% of its Share Capital
The Ministry of Corporate Affairs has brought amendments in the Companies (Share Capital and Debentures) Rules, 2014 as mentioned below:
Amendedment: Companies (Share Capital and Debentures)Amendment Rules, 2020
Effective from June 05, 2020
Amendment in Rule 8 of Companies (Share Capital and Debentures) Rules, 2014 relating to Issue of Sweat Equity Shares:
Amendment has been made to second proviso to Rule 8 (4) which allows a start-up company to issue sweat equity shares not exceeding 50 % of its paid up capital up to ten years from the date of its incorporation or registration. Earlier, start-up companies could issue sweat equity shares not exceeding 50% of its paid up capital upto five years.
Amendment in Rule 18 of Companies (Share Capital and Debentures) Rules, 2014 relating to Debentures:
Further, an amendment has been made to the Rule 18(7)(b)(v) which provides that, if a company is covered as Listed Company issuing debenture to public or a listed company privately placing debentures then it shall on or before the 30th day of April in each year, in respect of debentures issued by such a company, invest or deposit, as the case may be, a sum which shall not be less than 15 % of the amount of its debentures maturing during the year, ending on the 31st day of March of the next year in any one or more methods of investments or deposits.