Explain issue of Sweat Equity shares and its valuation.

Issue of Sweat Equity Shares: Sweat equity shares are issued for consideration other than cash such as technical know-how, brand equity, design, patent or any other intangible asset. The intangible asset could come from promoters or director or even employees of the company. Section 54 of the Companies Act, 2013, specifies the conditions under which sweat equity shares may be issued. The issue is to be authorised by a special resolution, the number of shares to be issued, the recipients, and at least one year must have passed after the company had been incorporated. Valuation of Sweat Equity Shares: Valuation of shares involves two steps - Valuation of the share price; and Valuation of the intangible assets. The valuation of the share price shall be done by a registered valuer and the intangible asset also be valued by a registered valuer (say the intellectual property right i.e. the human resource value needs to be evaluated and added or considered).