The Board of Directors of PQR Ltd. incorporated on 23rd January, 2019, having paid up equity share capital of ₹10 crores divided into 1,00,00,000 equity shares of ₹10 each, have resolved to issue 20,00,000 equity shares

The following provisions of the Companies Act, 2013 and Companies (Share Capital and Debentures) Rules, 2014 provide for issue of sweat equity shares by a company. (1) As per Section 2(88) of the Companies Act, 2013, "sweat equity shares" means such equity shares as are issued by a company to its directors or employees at a discount or for consideration, other than cash, for providing their know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called. (2) As per Section 54 (1) of the Companies Act, 2013, notwithstanding anything contained in Section 53 (prohibition on issue of shares at discount), a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely: the issue is authorised by a special resolution passed by the company 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 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 of India 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. (3) As per Section 54(2) of the Companies Act, 2013, 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. (4) As per Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014: the company shall not issue the sweat equity shares for more than 15% of the of the existing paid up equity share capital in a year or shares of the issue value of ₹5 crores whichever is higher, provided that issue of sweat equity shares shall not exceed 25% of the paid up equity capital of the company at any time. the special resolution authorizing the issue of sweat equity shares shall be valid for making the allotment within a period of not more than twelve months from the date of passing of the special resolution. the sweat equity shares issued to directors or employees shall be locked in/non-transferable for a period of three years from the date of allotment and the fact that the share certificates are under lock-in and the period of expiry of lock in shall be stamped in bold or mentioned in any other prominent manner on the share certificate. the sweat equity shares to be issued shall be valued at a price determined by a registered valuer as the fair price giving justification for such valuation. the valuation of intellectual property rights or of know how or value additions for which sweat equity shares are to be issued, shall be carried out by a registered valuer, who provide a proper report addressed to the Board of directors with justification for such valuation In view of the above referred provisions of the Companies Act, 2013 and the Companies (Share Capital and Debentures) Rules, 2014, after passing the special resolution of the members in the general meeting and ensuring other compliances referred above, 20,00,000 equity shares of ₹10 each at the face value i.e. at the paid-up value of ₹2 crores can be issued, by the Board of Directors of PQR Ltd., as sweat equity shares to Mr. Makarand, Director for providing technical know-how.