Section 8(1) in Companies (Share Capital and Debentures) Rules, 2014
(1)A company other than a listed company, which is not required to comply with the Securities and Exchange Board of India Regulations on sweat equity, shall not issue sweat equity shares to its directors or employees at a discount or for consideration other than cash, for their providing knowhow or making available rights in the nature of intellectual property rights or value additions, by whatever name called, unless the issue is authorised by a special resolution passed by the company in general meeting.Explanation. - For the purposes of this rule-(i)the expressions "Employee" means-(a)a permanent employee of the company who has been working in India or outside India, [***] [Omitted 'for at least last one year' by Notification No. G.S.R. 434(E), dated 7.5.2018 (w.e.f. 31.3.2014).]; or(b)a director of the company, whether a whole time director or not; or(c)an employee or a director as defined in sub-clauses (a) or (b) above of a subsidiary, in India or outside India, or of a holding company of the company;(ii)the expression 'Value additions' means actual or anticipated economic benefits derived or to be derived by the company from an expert or a professional for providing know-how or making available rights in the nature of intellectual property rights, by such person to whom sweat equity is being issued for which the consideration is not paid or included in the normal remuneration payable under the contract of employment, in the case of an employee.
