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This is possible. However, there need to be 2 valuations that should be carried out for this.
1. The company needs to be valued by a CA. This is usually done by projecting the financials of the company for 3 or 5 years and then calculating the value of the company by Discounted Cash Flow (DCF) method.
2. The economic benefit derived ou...
W Network
caI want to give Sweat equity to one of my consultants from my private limited company. What are the compliances involved
-
W Network
caThis is possible. However, there need to be 2 valuations that should be carried out for this.
1. The company needs to be valued by a CA. This is usually done by projecting the financials of the company for 3 or 5 years and then calculating the value of the company by Discounted Cash Flow (DCF) method.
2. The economic benefit derived out of the services from the consultant has to be valued by the CA and hence a justification is to be provided for alloting the shares at a discounted price to the consultants. It is worth noting that, if the company is not profitable, valuing the economic benefit of the consultant's services is very difficult.
Based on these 2 valuations fresh shares are issued and allotted to the consultants as Sweat equity
almost 3 years ago
View answer
I want to give Sweat equity to one of my consultants from my private limited company. What are the compliances involved
-
W Network
caThis is possible. However, there need to be 2 valuations that should be carried out for this.
1. The company needs to be valued by a CA. This is usually done by projecting the financials of the company for 3 or 5 years and then calculating the value of the company by Discounted Cash Flow (DCF) method.
2. The economic benefit derived out of the services from the consultant has to be valued by the CA and hence a justification is to be provided for alloting the shares at a discounted price to the consultants. It is worth noting that, if the company is not profitable, valuing the economic benefit of the consultant's services is very difficult.
Based on these 2 valuations fresh shares are issued and allotted to the consultants as Sweat equity
almost 3 years ago
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