Sweat Equity Shares

Sweat Equity Shares

Sweat Equity Shares are issued to directors or employees in exchange for their skills, know-how, or value brought to the company—rather than cash. They’re a powerful tool for startups and growing companies that want to reward key contributors. But issuing sweat equity requires strict compliance: valuation, approvals, disclosures, ROC filings, and limits set under the Companies Act.

We help you structure and issue sweat equity the right way so your company stays compliant while rewarding talent.

What we do

• Draft the Sweat Equity policy and explanatory statements

• Prepare board and shareholder resolutions

• Coordinate valuation of shares and intellectual property

• File MGT-14 and PAS-3 with MCA

• Maintain registers and documentation of allotment

• Guide on taxation and fair value considerations

• Support during audits, due diligence, and investor checks

Why this matters

Sweat equity is closely scrutinised because it involves issuing shares without cash consideration. Any mistake in valuation, disclosures, or filings can lead to penalties or questions from auditors, investors, or the ROC. Proper compliance protects both the company and the recipients.