White Chicks Ltd. is listed on Bombay Stock Exchange. The management wishes to issue sweat equity shares to the new Chairman and Managing Director for which extra-ordinary general meeting is scheduled on 15th July, 2016.

To calculate the minimum value at which sweat equity shares can be issued, we refer to the SEBI (Issue of Sweat Equity) Regulations, 2002 (which were applicable at the time of the exam, though now superseded by SEBI (Share Based Employee Benefits) Regulations, 2014, which have similar pricing principles for sweat equity). As per these regulations, the price of sweat equity shares shall not be less than the higher of the following: The average of the weekly high and low of the closing prices of the related equity shares during the last six months preceding the 'relevant date'; or The average of the weekly high and low of the closing prices of the related equity shares during the last two weeks preceding the 'relevant date'. Assumptions: 'Relevant date' is the date of the Board meeting in which the proposal for issuing sweat equity shares is approved, or any other date as specified by the regulations. For this calculation, we assume the provided averages are as on the 'relevant date' for the EGM scheduled on 15th July, 2016. White Chicks Ltd. is listed only on BSE. The intellectual property or value addition for which sweat equity shares are proposed to be issued has been valued as per SEBI Regulations. Given Information: Average of weekly high and low of the closing prices during last six months preceding the relevant date: ₹275.00 Average of weekly high and low of the closing prices during last two weeks preceding the relevant date: ₹314.00 Calculation: We need to take the higher of the two values: ₹275.00 (Average of weekly high and low for the last six months) ₹314.00 (Average of weekly high and low for the last two weeks) The higher of these two values is ₹314.00. Conclusion and Opinion to Management: Based on the SEBI (Issue of Sweat Equity) Regulations, 2002, the minimum value at which White Chicks Ltd. can issue sweat equity shares to the new Chairman and Managing Director is ₹314.00 per share . The management should ensure that the issue price is not less than this calculated minimum value to comply with the SEBI regulations. Any issue below this price would be a violation of the regulations.