ESOP in private company

[Nishtha Jain]

In case of issue of ESOPs in a private company, do we need to pass ordinary resolution or special resolution. Section 62(1)(b) was amended via notification G.S.R.464 (E) dated 5th June, 2015 and GSR 09(E) dated 04.01.2017 respectively, to exempt private companies from special resolution requirements. But rule 12 mandates SR. What needs to be done?

AI Summary

Private Companies Navigate Complex ESOP Regulations: Compliance Demands Special Resolution Despite Amended Section 62(1)(b) A private company seeking to issue Employee Stock Option Plans (ESOPs) faces a legal ambiguity. While Section 62(1)(b) was amended to exempt private companies from special resolution requirements through notifications, Rule 12 of Companies (Share Capital and Debentures) Rules still mandates a special resolution. Legal professionals recommend passing a special resolution to ensure full compliance and avoid potential legal complications, despite the conflicting regulatory guidance.