Q. Consider the following statements:
Companies use the Sweat Equity for retaining best employees
The sweat equity issued during a year should not exceed 15% of the total paid-up capital of the company or a value of Rs 5 crore, whichever is higher.
To issue sweat equity above this level, the approval from the Central Government is required
Which among the above statements is / are correct?
Answer: 1 2 & 3
Notes:
- Companies use the Sweat Equity for retaining best employees: This statement is correct. Sweat equity allows companies to offer company shares to employees at discounted or even zero price to reward their contribution. This helps retain top talent.
- The sweat equity issued during a year should not exceed 15% of the total paid-up capital of the company or a value of Rs 5 crore, whichever is higher.: This statement is correct. Indian company law does put this threshold to limit sweat equity allotment.
- To issue sweat equity above this level, the approval from the Central Government is required.: This statement is also correct. If a company wants to issue sweat equity shares beyond 15% of paid up capital or Rs 5 crores, it requires approval from the central government.
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