What are the conditions to be fulfilled for issue of sweat equity shares ? Explain the lock in period with regard to sweat equity shares. Whether sweat equity shares may be issued to the non-whole time directors?

A company whose equity shares are listed on a recognised stock exchange may issue sweat equity shares in accordance with section 54 of the Companies Act, 2013 and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 to its employees for providing know-how or making available rights in the nature of intellectual property rights or value additions. According to Section 54 of the Companies Act, 2013, a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled. The issue is authorized by a special resolution passed by the company. The resolution specifies the number of shares, current market price, consideration if any and the class or classes of directors or employees to whom such equity shares are to be issued. Where the equity shares of the company are listed on a recognized stock exchange, the sweat equity shares are issued in accordance with the Regulations made by SEBI in this regard and if they are not listed, the sweat equity shares are to be issued in accordance with Rule 8 of the Companies (Share Capital and Debenture) Rules, 2014. The rights, limitations, restrictions and provisions as applicable to equity shares for the time being, shall also be applicable to the sweat equity shares issued under the Section 54 of Companies Act, 2013 and the holders of such shares shall rank pari passu with other equity shareholders. Lock-in The Sweat Equity shares shall be locked in for such period of time as specified in relation to a preferential issue under the SEBI (ICDR) Regulations, 2018. These Regulations shall apply if a company makes a public issue after it has issued sweat equity shares. Regulation 29 of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 provides the definition of employee in relation to issue of sweat equity shares and covers: an employee of the company working in India or abroad; or a director of the company whether a whole time director or not. Hence, Sweat Equity shares can be issued to a director of the company whether a whole time director or not.