Question And Answer
Subject: Can ESOP be issued without voting rights?
Querist: Sri Hari
Answered by:
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Date: November 11, 2022
Query asked by Sri Hari

Can ESOP be issued without voting rights?

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As per section 43 of the Companies Act, 2013 a Company may issue equity shares with voting rights or with differential rights as to dividend, voting or otherwise. Section 47 offers every member a right to vote. On reading both the provisions together, it can be interpreted that a Company may issue shares with differential right as to dividend or voting but it cannot issue shares without voting rights at all.

However, as per the Companies Amendment Act, 2015, Private Companies subject to the provisions of Memorandum and Articles of the Company have been given exemption from both of the above provisions, Therefore, a private limited company should be in a position to issue shares without voting rights.

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