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ESOPs and CCPS


Considering Rule 12 of the Companies (Share Capital and Debenture Rules) does not expressly provide that ESOPs should convert into equity shares of the company, can ESOPs convert to compulsorily convertible preference shares in a private limited company? All references in the rules are to "shares" and not expressly "equity shares" (except in case of a listed company reference). Definition of shares: (84) "share" means a share in the share capital of a company and includes stock. Considering all this, can ESOPs convert to CCPS?

If not, is there an express prohibition (provision) under the act/rules which provides that ESOPs can only convert to equity shares?



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