what are sweat equity shares

As per the Section 79A of the Company Act 1956, ’Sweat Equity Shares’ refers to those equity shares that are issued by the company to its employees or directors at a discount or for consideration other than cash for providing know-how or intellectual property right or value additions by, whatever named called. In simple words, these shares are issued to the employees and the directors of a company at discounted rate in order to motivate them and give them a sense of ownership of a part of company’s capital. For example, Infosys has first started issuing Sweat Equity Shares in India.