Audit and Auditors

Treatment of non-cash consideration

Disclose in Board Report Where Sweat equity shares are issued for a non-cash consideration on the basis of a valuation report in respect thereof obtained from the registered valuer, such non-cash consideration shall be treated in the following manner in the books of account of the company- (a) where the non-cash consideration takes the form of a depreciable or amortizable asset, it shall be carried to the balance sheet of the company in accordance with the accounting standards; or (b) where clause (a) is not applicable, it shall be expensed as provided in the accounting standards.

The Board of Directors shall, inter-alia, disclose in the Director’s report for the year in which such shares are issued, the specified details of issue of sweat equity shares.

Ranking of Sweat Equity Shares Maintenance of Register The company shall maintain a Register of Sweat Equity Shares in Form No. SH-3 and shall forthwith enter therein the particulars of Sweat Equity Shares issued u/s 54. The Register of Sweat Equity Shares shall be maintained at the registered office of the company or such other place as the Board may decide.

The rights, limitations, restrictions and provisions as are for the time being applicable to equity shares shall be applicable to the Sweat equity shares issued under this section and the holders of such shares shall rank pari passuwith other equity shareholders.

IMPORTANT QUESTIONS Q. No. 8: Trisha Data Security Limited was incorporated on 1st August, 2021 with a paid-up share capital of ₹ 200 crores. Within a small period of about 4 months in operation, it has earned sizeable profits and has topped the charts for its high employee – friendly environment. The company wants to issue sweat equity to its employees. A close friend of the CEO of the Company has told him that the Company cannot issue sweat equity shares as minimum 2 years have not elapsed since the time company commended its business. The CEO of the company has approached you to advice about the essential conditions to be fulfilled before the issue of sweat equity shares especially since their company is just a few months old. [RTP-May 19, MTP-March 19, May 20] HINT: Refer Sec 54. Company can issue Sweat equity shares by following the conditions as mentioned in Sec. 54. It does not make a difference that the company is just a few months old. Q. No. 9: Yellow Pvt Ltd. is an unlisted company incorporated in the year 2012. The company have share capital of ₹ 50 crores. The company has decided to issue Sweat equity shares to its directors and employees. The company decided to issue 10% Sweat equity shares (which in total will add up to 30% of its paid-up equity shares), with a locking period of 5 years, as it is a start-up company. How would you justify these facts in relation to the provision for issue of Sweat equity shares by a start-up company, with reference to the provision of the Company Act, 2013. Explain? [RTP-Nov. 21, MTP-Nov. 21] HINT: Refer Sec. 54 read with Rule 8. Company can issue Sweat equity shares by passing special resolution at its general meeting. The company as a startup company is right in issue of 10% Sweat equity share as it is overall within the limit of 50% of its paid-up share capital. But the lock in period of the shares is limited to maximum three years period from the date of allotment.

AUTHOR

: PANKAJ GARG PUBLISHER : TAXMANN DATE OF PUBLICATION : FEBRUARY 2022 EDITION : 2022 ISBN NO : 9789393656551 NO. OF PAGES : 384 BINDING TYPE : PAPERBACK

Rs. : 750 | USD : 43

Description

This book is prepared exclusively for the Intermediate Level of Chartered Accountancy Examination requirement. It covers the entire revised syllabus as per ICAI. The Present Publication is the Latest 2022 Edition & Updated till 31st October 2021 for CA-Inter | New Syllabus | May/Nov. 2022 exams, authored by Pankaj Garg, with the following noteworthy features: u [Tabular Presentation] of the subject matter u [Simple & Concise Language] for easy understanding u [450+ Question & Case Studies] along with Hints for Self-practice n Detailed answers provided in the 2022 Edition of Taxmann’s CRACKER cum Exam Guide for Corporate & Other Laws for CA-Intermediate | New Syllabus n Questions are covered for each topic for better understanding u Coverage of this book includes: n All Past Exam Question till the December 2021 CA-Inter Exam with suggested answers for Part II (Descriptive Questions) n All Questions from RTPs and MTPs of ICAI u [Points-wise Answers] for easy learning u [Topic-wise & Chapter-wise Marks Distribution] for past exams from May 2018, at the beginning of each chapter u [Student-Oriented Book] The authors have developed this book, keeping in mind the following factors: n Interaction of the authors with their students, with specific emphasis on difficulties faced by students in the examinations n Shaped by the authors’ experience of teaching the subject matter at different levels n Reaction and responses of students have also been incorporated at different places in the book