Answer with reference to SEBI Regulations: ABC Ltd., a leading software development company is having outstanding paid-up equity share capital of ₹ 20 crore as on 31st March, 2021. On 20th April, 2021, it has issued swea

As per Regulation 31 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021: A company shall not issue sweat equity shares for more than fifteen percent of the existing paid-up equity share capital in a year. However, the issuance of sweat equity shares in the company shall not exceed twenty-five percent of the paid-up equity share capital of the company at any time. In the given case, ABC Ltd. has an outstanding paid-up equity share capital of ₹20 crore. The annual limit for issuing sweat equity shares is 15% of ₹20 crore = ₹3 crore. ABC Ltd. has already issued sweat equity shares of ₹2 crore on April 20, 2021. The company now plans to allot further sweat equity shares of ₹2 crore during the same year. The total proposed issuance for the year would be ₹2 crore + ₹2 crore = ₹4 crore. Since ₹4 crore exceeds the annual limit of ₹3 crore (15% of ₹20 crore), it is not permissible under the law for ABC Ltd. to allot the further ₹2 crore sweat equity shares in the same year.