Section 54: Issue of sweat equity shares
What this section makes a company do, step by step, with the eForms and the days each step allows. Then the section itself, quoted in full.
The procedure, step by step.
Every step in order, the days each one allows, and the eForm it files.
Sweat Equity (S.54)
6 steps · about 103 days · PAS-3, MGT-14| Step | Allows | Files |
|---|---|---|
| Obtain Valuation Report | 14 days | — |
| Board Approval | 7 days | — |
| Pass Special Resolution | 30 days | — |
| Allot Sweat Equity Shares | 7 days | — |
| File PAS-3 | 15 days | PAS-3 |
| File MGT-14 | 30 days | MGT-14 |
Section 54 in full.
(1) Notwithstanding anything contained in section 53, a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely:—
(a) the issue is authorised by a special resolution passed by the company;
(b) the resolution specifies the number of shares, the current market price, consideration, if any, and the class or classes of directors or employees to whom such equity shares are to be issued; * * * * *
(d) where the equity shares of the company are listed on a recognised stock exchange, the sweat equity shares are issued in accordance with the regulations made by the Securities and Exchange Board in this behalf and if they are not so listed, the sweat equity shares are issued in accordance with such rules as may be prescribed.
(2) 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 passu with other equity shareholders.
Quoted from the Companies Act 2013 (Act 18 of 2013) as amended, and checked against the MCA text on 17 August 2026. Reproduction of an Act is permitted under section 52(1)(q) of the Copyright Act 1957.
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