Do you have to convert your company to a C corporation to form an Employee Ownership Trust?

No. Forming an Employee Ownership Trust does not, by itself, require becoming a C corporation. A trust can hold S-corp or C-corp stock or an LLC interest, so many companies keep their existing entity. The C-corp question really traces to ESOPs and Section 1042, whose capital-gains deferral is not available for a straight sale to an EOT. Whether your own entity should change is a facts-and-circumstances call for a CPA or attorney.