TaxTMI 
TaxTMI 
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?
ESOP in private company
13 May 2025 
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ESOP resolution requirement: private companies may use ordinary resolution, though rules still recommend passing a special resolution.
The Companies Act requirement for a special resolution for ESOPs was modified by notifications to exempt private companies, allowing issuance by ordinary resolution, but the Companies (Share Capital and Debentures) Rules still prescribe shareholder approval by special resolution and remain unamended, creating a regulatory inconsistency and practical compliance risk; best practice is to pass a special resolution until formal clarification or amendment is issued. (AI Summary)
The Companies Act requirement for a special resolution for ESOPs was modified by notifications to exempt private companies, allowing issuance by ordinary resolution, but the Companies (Share Capital and Debentures) Rules still prescribe shareholder approval by special resolution and remain unamended, creating a regulatory inconsistency and practical compliance risk; best practice is to pass a special resolution until formal clarification or amendment is issued. (AI Summary)