The Ministry of Corporate Affairs vide its notification dated 5th June 2020 has published the Companies (Share Capital and Debentures) Amendment Rules, 2020.
The Amendment is brought under rule 8 which deals with the issue of sweat equity shares under which sub-clause 4 provides that the company shall not issue sweat equity shares for more than fifteen percent of the existing paid-up equity share capital in a year or shares of the issue value of rupees five crores, whichever is higher.
The amendment allows a start-up company to issue sweat equity shares not exceeding fifty percent of its paid up capital up to 10 years from the date of its incorporation or registration. Previously it was allowed only for 5 years.
Further, rule 18(7) (b)(v) is substituted to read that a company 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 fifteen percent of the number 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 as provided in sub-clause (vi).
Provided that the amount remaining invested or deposited, as the case may be, shall not at any time fall below fifteen percent of the amount of the debentures maturing during the year ending on 31st day of March of that year.
Click here to read the notification.
