About potential equity share

according to me sweat equity share are issued to person who work for company for free and in exchange company issue him certain amt of share in good gesture. company afford the cost of these share so these are potential equity.

if i am wrong plz rectify me i would love to know about it in detail.....

AS 20 defines "potential equity share" as follows - 

A potential equity share is a financial instrument or other contract that

entitles, or may entitle, its holder to equity shares

Thus, SWEAT EQUITY SHARES are potential Equity Shares as it entitles the holder (employee) for a equity share.

Thanks