Sweat equity shares are a class of equity shares issued by a company to its directors or employees at a discount or for consideration other than cash. Under the Companies Act, 2013, they are issued in recognition of the contribution made by employees or directors towards the growth, development, intellectual property, or creation of value for the company. The main purpose of sweat equity shares is to reward and motivate persons who contribute significantly to the success of the company and to retain talented employees and directors. Sweat equity shares may be issued for providing know-how, intellectual property rights, or other value additions to the company. They are different from ordinary equity shares because they are generally issued as a reward for the contribution or expertise of eligible employees or directors rather than simply against cash investment. The Companies Act, 2013 lays down several conditions for the issue of sweat equity shares. First, the issue must be authorised by a special resolution passed by the shareholders in a general meeting. The resolution should specify the number of shares to be