Simran Simple Synthetics Ltd. is contemplating to issue Sweat equity shares for their staff in R&D department. Shares are listed on both the exchanges i.e., BSE and NSE. As a Company Secretary, you are tasked with en

To The Board of Directors Simran Simple Synthetics Ltd. Sub: Manner of fixing the price of sweat equity shares issued by Simran Simple Synthetics Ltd. The shares of the company are listed on BSE and NSE respectively. As the company wants to issue sweat equity shares it has to comply with the Securities and Exchange Board of India (Issue of Sweat Equity) Regulations, 2002. SEBI has specified various norms including the provisions relating to fixation of price in case of issuance of sweat equity shares by a listed company. In calculating the price for sweat equity shares one need to follow the Securities and Exchange Board of India (Issue of Sweat Equity) Regulations, 2002. As per these Regulations, price is determined as per higher of the following as on the relevant date: Average of weekly high and low closing prices during last six months; Average of weekly high and low closing prices during last 2 preceding weeks "Relevant date" for this purpose means the date which is thirty days prior to the date on which the meeting of the shareholders is convened, in terms of the provisions of the Companies Act, 2013. If the shares are listed on more than one stock exchange, but quoted only on one stock exchange on the given date, then the price on that stock exchange shall be considered. If the share price is quoted on more than one stock exchange, then the stock exchange where there is highest trading volume during that date shall be considered. If shares are not quoted on the given date, then the share price on the next trading day shall be considered. Hence, in the instant case trading volumes are to be compared in addition to quoted price in both BSE and NSE stock exchanges. The Regulations also require valuation of intellectual property that creates value addition.