MUMBAI, 8 JUNE, 2020 (GPN): Mr. Ankit Singhi, Partner, Corporate Professionals on MCA amending the Share Capital and Debentures Rules:

“Amendments in sweat equity provisions are welcome. Amendment in the definition of start-up will remove ambiguity and increase in the period of allotment, will definitely help a start-up to attract talent. Relaxation to listed companies from investing certain % of maturing deposits will certainly lead to the availability of funds and easing of liquidity position.”

Amendment:- MCA vide notification dated 05th June 2020 has amended the Companies (Share Capital and Debentures) Rules, 2014 to provide the following amendments:

In the provision of issue of sweat equity shares, the old definition of a startup company which was issued by the Department of Industrial Policy and Promotion vide Notification No. G.S.R. 180(E) dated 17th February 2016 was substituted with the new definition as issued vide Notification No. G.S.R. 127(E) dated 19th February 2019.

Now, a start-up company can issue sweat equity shares not exceeding 15% of its paid-up share capital up to 10 (ten) years from the date of incorporation. Earlier the time period was 5 (five) years.

Now, a listed company which has privately placed its debentures will not be required to invest or deposit, as the case may be, a sum which shall not be less than 15% of the amount of its debentures maturing during the year, ending on the 31st day of March of the next year on or before the 30th day of April in each year. ENDS