Rule 8 of Companies (Share Capital and Debenture) Rules, 2014 provides that a company shall not issue sweat equity shares for more than 15% of the existing paid-up equity share capital or shares of the value of 5 crores, whichever is higher and it cannot exceed 25% of the paid-up equity capital of ⦠Q3. As per Section 52 of the companies act, amount collected as premium on securities cannot be utilised for: 34. Sweat equity compensates for the shortage of cash. The equity stockholders get the opportunity to cast their vote in major business decisions. The Company shall not issue Sweat Equity Shares for more than _____ of existing paid-up share capital at one-time. SECTION 54. A rights issue is a way by which a listed company can raise additional capital. The amount payable on application on every security shall not be less than five per cent. Sweat Equity in the form of shares. Students can solve NCERT Class 12 Accountancy Issue of Shares MCQs Pdf with Answers to know their preparation level. Answer: (1) It does not involve floatation costs and brokerage. For example, If you're paying the person who did the work 10,000 shares at $5 per share, but your par value is $1 per share, then the value of the sweat equity beyond the par value is $50,000 (10,000 shares x $5 per share) - $10,000 (10,000 shares x $1 per share) or $40,000. Stocks and Shares MCQ Question with Answer Stocks and Shares MCQ with detailed explanation for interview, entrance and competitive exams. A new company set up by existing companies with five year track record can issue share at premium provided: 35. Equity share is an ordinary share. 18. 15. Q8. Explanation are given for understanding. The term employee has not been defined under the 2013 Act. Match the following with relevant sections: 6. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 7 Issue of Shares. If the person who performed the sweat equity delivered work worth $30,000, the person should be paid 2,000 shares of stock. MCQ Questions for Class 11 Business Studies with Answers were prepared according to the latest question paper pattern. Dear aspirants, Get all latest content delivered straight to your inbox. of the nominal amount of the security, Answer: (1) A company limited by shares may, if so authorised by its articles, issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue. A company is said to be Deemed Public Company as per Companies Act, 2013: Deemed Company would mean a company which is subsidiary of a public company. âSweat equity sharesâ are such equity shares, which 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. b. August – 2020 Edition Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. However, for the purpose of section 54 of the 2013 Act and the related rules, Rule 8 of the Companies (Share capital and Debentures) Rules, 2014 defines âemployeeâ so as to mean: Sweat Equity Taxability. Q2. Q7. We are presenting you the Companies Act MCQ Part 4 for SEBI Grade A Companies Act Section of the exam. Sweat equity is contribution to a project or enterprise in the form of effort and toil. It refers to the shares issued at discount to the employees and directors and shares issued for consideration other that cash for providing intellectual property rights, know how , value additions to the company or similar contributions. Q10. 5%; 10%; 15%; 20%; Answer: (3) The Company shall not issue Sweat Equity Shares for more than 15% of existing paid-up share capital or issue value of shares Rs.5,00,00,000/- (Rupees Five Crores), whichever is higher. The Company shall not issue Sweat Equity Shares for more than _____ of existing paid-up share capital at one-time. Importance of Sweat Equity. Financial Management MCQs (Multiple Choice Questions and Answers) Also Useful for NT…, 1. A sweat equity shares contract is a legal document signed by the shareholders that guarantee their equity rights. June – 2020 Edition (a) Special resolution (b) Ordinary resolution (c) Unanimous resolution (d) None of these Ans. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 7 Issue of Shares. Issue of share at a discount must be authorised by a resolution passed by the company in general meeting and duly sanctioned by the central government. Only sweat equity shares can be issued at a discount. In this video we will learn about the meaning and provisions regarding issue of Sweat Equity Shares under Companies Act 2013. “Sweat Equity Shares” means such equity shares as are issued by the 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, Q4. Nothing contained in these regulations can be applied to any unlisted company. Which law defines Sweat Equity Shares? ... 2013, A company cannot issue its shares at discount except sweat equity shares. Issue of Sweat Equity Shares According to section 2(88), sweat equity shares mean such equity shares 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. A company grants ESOPs to its employees for buying a specified number of shares of the company at a defined price after the option period (a certain number of years), Click to go to SEBI Grade A Preparation Page, Tags: Companies Act MCQ Part 4, Companies Act MCQ Part 4 Quiz, September – 2020 Edition Quantum of Sweat Equity Shares: The value of shares issued should not be more than 15% of paid up capital of the company in a year or Rs. Q5. If a company violates the Section 33 of Companies Act related to Abridged Prospectus, then it shall be punishable with fine of _________? Answer: (4) Financial Management MCQs | For B.Com and M.Com | NTA NET EXAM (Commerce 08), MCQ on Accounts of Holding Companies (Revised), For June 2013 ICWAI Stage I Examination: Fast track notes on Income under the head House Property. What are Sweat Equity Shares? Which of the following statement is false? To pay the individuals who contributed the sweat equity, the share price or unit value of the company is multiplied by the monetary amount for the labor performed to get the sweat equity value for that person. Bonus shares are the additional shares that a company gives to its existing shareholders on the basis of shares owned by them. Match the following: Minimum number of members in. January – 2020 Edition December – 2019 Edition. July – 2020 Edition March – 2020 Edition Body corporate does not include Co- operative society. Sweat Equity Shares (B) Private Equity Shares (D) Bonus Equity Shares (iv) Issue and Allotment of Shares. Q4. Securities premium account is shown on the liabilities side of the balance sheet under the head: 19. 16. We provide complete coaching for Commerece and Arts stream from Class 12 to Master Degree level. Permission from central government to issue share capital is required if Nominal capital exceeds Rs. Total value of sweat equity shares issued by a Company shall not exceed 25% ⦠Disadvantage of Sweat Issue: As sweat equity shares are issued at concessional rates, the company loses financially. As per Companies Act 2013, what is maximum tenure of preference shares except for infrastructure projects? Kumar Nirmal Prasad on. QUANTUM OF SWEAT EQUITY SHARE. 14. Answer: (2) In which of the following cases a company can use Capital Redemption Reserve? Q9. The Register of the Sweat Equity Shares will be maintained at the registered office of the company or any such other place as the Board may decide Sweat equity shares cannot be transferred within 3 years from the date of their allotment. Bonus shares are issued to the shareholders without any additional cost. The financial exposure to the company is more in cases of sweat equity. Amount to be transferred to share forfeiture A/c= 7,200(800 x 9) â 2,400(800 x 3)= Rs. 1 crore. Difference between Equity Shares and Preference Shares. As per Section 2(88) of the Companies Act, 2013, Sweat Equity Shares are the shares issued by the company to its Director or employee at a discount or for consideration other than cash, for providing know-how or making available like intellectual property rights or value addition.. Who are eligible for Sweat equity Shares? Disbursement of sweat equity: In a year, the sweat equity shares cannot account for more than 15% of the existing paid up equity share capital or shares having issue value of rupees 5 crores, whichever is higher. This contains 20 Multiple Choice Questions for Commerce Test: Company Accounts Issue Of Shares - 2 (mcq) to study with solutions a complete question bank. If a company violates the provisions of Section 33 of Companies Act 2013, it shall be punishable with a fine of fifty thousand rupees for each default. Which among the following is type of share issued to employees of the company usually at discounted price? Sweat Equity is a new equity instrument which was floated in the Companies (Amendment) ordinance 1998 (u/s 79A of the companies act 1956. Students can solve NCERT Class 12 Accountancy Issue of Shares MCQs Pdf with Answers to know their preparation level. (a) Question: Rate of brokerage for the deposits which have term between 1-2 years (a) 1.5% (b) 2% (c) 1% (d) None of [â¦] A company may issue preference shares for a period exceeding twenty years for infrastructure projects. For example, Bob receives $100 dollars in sweat equity from ABC Corp. Bob is required to pay taxes on the value of sweat equity received ($100 dollars) as earned income. QUESTION: 13. About Kumar Nirmal Prasad Kumar Nirmal Prasad is the founder and CEO of Dynamic tutorials and Services. 13. When they are mostly offered? For example, if a corporation's share price is $10 and a person performed work worth $100,000, that person did work worth 10,000 shares. vaibhav chauhan on. The Sweat Equity Shares are non-transferable and are in lock-in period for a period of 3 years from the date of allotment. Thus, sweat equity shares denote stocks that companies issue to reward such contributions. Moreover, a Sweat Equity Share Contract is necessary to prevent conflicts, especially for businesses with many partners. Sweat Equity Shares issued at a discount must belong to a class of shares already issued. The company can use the Capital Redemption Reserve to issue the fully paid-up bonus shares. A company can issue share at a discount if, MCQ on Issue of Share and Share Capital (2020), MCQ ON ISSUE OF SHARES (REVISED UPTO DATE), (No Minimum capital is necessary as per Companies Amendment Act’ 2013), Follow me on YouTube - Dynamic Tutorials and Services. 7. Q1. Answer: (4) Q5. But sweat equity once paid canât lapse. New shares dilute the interests of all shareholders. The company will maintain a Register of the Sweat Equity Shares in Form No. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Answer: (3) It does not matter if such companies are private by its articles. MCQ OF ISSUE OF SHARES accountancy class12 by. As the name suggests, Sweat equity share ----- Equity share which is exchanged for the sweat of the company's people. 8. However, instead of going to the public, the company gives its existing shareholders the right to subscribe to newly issued shares in proportion to their existing holdings. Which of the following are the characteristics of a company? Equity share and Preference share are the two types of share that a company issues. Sweat equity literally refers to an individualâs contribution â typically not monetary â to an organisation. MCQ - Issue of Shares and Share Capital | Multiple Choice Questions and Answers | Company Accounts | Corprorate Accounts | CMA MCQ by. Share application and allotment account is a: 17. 2. Sweat equity is a form of income. 36. Calculate the value of the sweat equity beyond the par value of the stock. Match the following: Maximum number of members in: 5. Even so, the issuance of such shares cannot exceed 25% of the paid-up capital of the company at any time. ISSUE OF SWEAT EQUITY SHARES [Effective from 1st April, 2014] (1) Notwithstanding anything contained in section 53, a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely:â (a) the issue is authorised by a special resolution passed by the company; (b) the⦠Answer: (3) [Public] [Private] [Employee] [All of above] 8 people answered this MCQ question is the answer among Public,Private,Employee,All of above for the mcq Sweat equity shares are issued to Answer: (1) The Company shall not issue Sweat Equity Shares for more than 15% of existing paid-up share capital or issue value of shares Rs.5,00,00,000/- (Rupees Five Crores), whichever is higher. What is the lock-in period of Sweat Equity Shares? Which of the following capital is not shown in company’s balance sheet? February – 2020 Edition Which among the following is type of share issued to existing shareholders to increase its subscribed share capital? 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