Direct Route vs Trust Route for ESOP in India: Structure, Tax, Compliance

An Employee Stock Option Plan in India can be run in one of two ways: the company grants and allots shares to employees directly, or it funds a trust that holds and transfers shares on employees’ behalf. The Companies Act, 2013 permits both, and neither route is inherently more compliant than the other. What changes is who signs the allotment, how the company funds the share pool, how quickly employees get liquidity, and, increasingly, how SEBI and the tax department treat the arrangement now that both regulators have amended their positions in the last twelve months. This article sets out the structure, tax, and compliance differences founders and CFOs actually need before choosing or switching routes.

What is the difference between ESOP direct route and trust route in India?

In the direct route, the company grants options and allots fresh shares directly to employees on exercise, under Section 62(1)(b) of the Companies Act, 2013. In the trust route, the company funds an employee welfare trust under Section 67(3)(b) and Rule 16 of the Companies (Share Capital and Debentures) Rules, 2014, and the trust holds and transfers shares to employees. Both are legal; the choice affects cap table timing, employee liquidity, and employer tax deduction, not statutory validity.

What is the ESOP direct route and how does it work?

The direct route is a two-party arrangement between the company and the employee, with no intermediary holding shares in between. The company’s board and shareholders approve an ESOP scheme, options are granted to eligible employees against a vesting schedule, and on exercise, the company allots fresh equity shares straight to the employee’s demat or physical folio.

Under Section 62(1)(b) of the Companies Act, 2013, a further issue of shares to employees under a scheme requires shareholder approval, ordinary resolution for private companies and special resolution for public companies, along with the disclosures prescribed under Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014. These include the total options to be granted, exercise price or the formula for it, vesting period (minimum one year from grant to first vesting), exercise period, and lock-in, if any.

Because there is no trust to fund, no separate legal entity to register, and no additional layer of trustees, the direct route is the default for early-stage companies. The board resolution, the ESOP scheme document, and the Form PAS-3 return of allotment filed with the Registrar of Companies after each exercise event are, in most cases, the entire compliance trail.

The trade-off shows up at liquidity events. Because shares are allotted only on exercise, an employee who wants to leave before a full vesting cycle typically loses unvested options outright, and even vested but unexercised options may lapse on a short post-termination exercise window (commonly 90 days, though schemes vary). There is no internal market for an employee to sell shares back to the company between funding rounds; any secondary liquidity has to be separately structured, usually through a buyback or a founder or investor-led purchase.

What is the ESOP trust route and how is it funded?

The trust route introduces an employee welfare trust, registered under the Indian Trusts Act, 1882, that sits between the company and the employees. The company (the settlor) transfers cash or shares to the trust, the trust (through its trustees) holds those shares, and on exercise, the trust, not the company, transfers shares to the employee, either from its existing holding (secondary transfer) or by subscribing to a fresh allotment from the company (primary transfer, followed by transfer from the trust to the employee).

A trust structure typically involves three parties:

• Settlor: the company that establishes and funds the trust
• Trustee: an independent person or corporate trustee (never a director, key managerial personnel, or promoter of the company, or anyone beneficially holding 10 percent or more of paid-up capital, under Section 67(3) of the Companies Act, 2013) who holds legal title to the shares
• Beneficiaries: the employees for whose benefit the trust holds shares, without themselves holding legal title until the trust transfers shares to them

The company’s ability to fund this trust is not automatic. Section 67(2) of the Companies Act, 2013 prohibits a company from giving financial assistance, directly or indirectly, for the purchase of its own shares. Section 67(3)(b) creates a specific carve-out: a company may provide money to trustees to purchase or subscribe for its fully paid-up shares, for the benefit of employees, provided the scheme is approved by a special resolution and complies with the prescribed requirements. Those requirements sit in Rule 16 of the Companies (Share Capital and Debentures) Rules, 2014, and this is the provision that most competing explainers skip entirely, even though it is what makes trust funding legal rather than a related-party loan in disguise.

Because the trust is a distinct legal person holding a pool of shares, it can create genuine internal liquidity. Employees can exercise and receive shares from the trust’s existing pool without the company allotting fresh equity each time, and the trust can run periodic windows where it purchases shares from employees, funded by the company or from proceeds of earlier share sales, that let employees cash out before a formal exit event. This is the structural reason listed companies and late-stage private companies gravitate toward the trust route.

This internal purchase mechanism is frequently, and incorrectly, described as a “buyback” in the same breath as a statutory buyback of shares. The two are governed by entirely different provisions. A trust purchasing shares from employees under Rule 16 does not cancel or extinguish those shares; the trust simply holds them for redistribution to other employees later, and the company’s issued capital is unaffected. A statutory buyback under Section 68 of the Companies Act, 2013, by contrast, requires the company itself to repurchase and extinguish shares, is capped at 25 percent of paid-up capital and free reserves in a financial year, and carries a one-year cooling-off period before the next buyback. Founders negotiating a trust-funded internal purchase window should not assume Section 68’s buyback limits or timelines apply; they do not, but the Rule 16 aggregate cap of 5 percent of paid-up capital and free reserves does.

A related, less settled question is whether the company’s funding of the trust itself could be treated as a loan to a “concern” in which its own shareholders have a substantial interest, triggering deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961. Section 2(22)(e) applies where a closely held company advances a loan to a shareholder holding 10 percent or more of voting power, or to a concern in which such a shareholder holds a substantial interest, to the extent of the company’s accumulated profits. Whether a scheme-driven ESOP trust, structured and funded under Section 67(3)(b) and Rule 16 specifically to benefit employees rather than any individual shareholder, falls within this deeming fiction has not been squarely tested by courts in the ESOP context. Companies funding a trust with a genuine loan (rather than an outright contribution) should flag this as an open question for their tax advisor rather than assume the ESOP-specific corporate law provision automatically carries over into a corresponding income tax exemption.

Is the ESOP trust route legal under the Companies Act, 2013?

Yes, subject to conditions. Rule 16 requires a special resolution disclosing the trust’s beneficiaries and trustees, purchase through a recognised stock exchange for listed shares, valuation by a registered valuer for unlisted shares, and a cap: the aggregate value of shares purchased together with money provided by the company cannot exceed 5 percent of the company’s paid-up capital and free reserves (Rule 16, Companies (Share Capital and Debentures) Rules, 2014).

A separate and commonly missed relaxation applies to private companies. An MCA notification dated 5 June 2015 exempts private companies from the Section 67 conditions altogether, provided three tests are met: no other body corporate has invested money in the company’s share capital, the company’s borrowings from banks, financial institutions, or any body corporate are less than twice its paid-up share capital or ₹50 crore, whichever is lower, and the company is not in default of repaying such borrowings. Once a private company takes on institutional equity investment (which almost every venture-backed startup does from the seed round onward), this exemption typically falls away, and the company reverts to complying with the full Rule 16 conditions to fund its trust. Founders assuming the private company exemption survives past their first priced round are a recurring finding in fundraising due diligence.

Direct route vs trust route: structure and cap table comparison

The structural differences below decide almost every practical question a board asks when comparing the two routes, from dilution timing to who administers exercises during a fundraise.

Direct route vs trust route: structural comparison

The trust route’s single biggest structural advantage is that it decouples the timing of dilution from the timing of individual employee exercises. A company that wants investors to see a clean, settled cap table before a priced round often prefers this, because the trust’s holding is already reflected once, rather than the cap table shifting every time an employee exercises over the following two years.

How is the ESOP trust route taxed differently from the direct route?

For the employee, taxation is identical under both routes: the perquisite value (fair market value on the date of exercise, less the exercise price) is taxed as salary income under Section 17(2)(vi) of the Income Tax Act, 1961 (Section 17 of the Income Tax Act, 2025, for exercises on or after 1 April 2026), with TDS deducted under Section 192 of the 1961 Act, now Section 392 of the Income Tax Act, 2025, and any subsequent gain on sale is taxed as capital gains, with the holding period reckoned from the date of allotment or transfer under Explanation 1(hb) to Section 2(42A) of the 1961 Act. What differs is the employer’s position on tax deductibility of the ESOP expense, and this is where the trust route creates genuine, unresolved friction that direct-route schemes rarely face.

Under the Guidance Note on Accounting for Employee Share-based Payments, an ESOP trust is treated as an extension of the employer for administration purposes, and the employer books the ESOP cost over the vesting period. The tax department has, in a run of assessments, contested the deduction where shares moved from the company to the trust at one value and from the trust to the employee at a different value months or years later, arguing the deduction claimed does not match the actual concession the employee received. This dispute barely arises under the direct route, because there is no intervening trust holding period during which market value can move. A company adopting the trust route should build its transfer pricing between company-to-trust and trust-to-employee legs, and its documentation trail, with this contest in mind from day one, not after the first assessment notice.

Direct route vs trust route: tax and compliance comparison

Companies still reporting under the ICAI Guidance Note on Accounting for Employee Share-based Payments (2020), rather than Ind AS, do not get this automatic treasury-share elimination and should confirm the correct presentation with their auditor before the first trust-funded allotment, since getting the corporate law and Companies Act approvals right does not, by itself, make the accounting treatment correct. A handful of states have also moved independently on issuance stamp duty: a Delhi Revenue Department circular dated 29 September 2025 directs companies registered in the National Capital Territory of Delhi to pay stamp duty at 0.1 percent on all share issuances, including demat issuances, overriding the uniform 0.005 percent rate for companies incorporated there. Confirm the applicable state position before treating the uniform rate as final.

One more dating point matters for every citation above. The Income Tax Act, 2025 received Presidential assent on 21 August 2025 and replaced the Income Tax Act, 1961 with effect from 1 April 2026 (Tax Year 2026-27 onward), renumbering the Act while leaving the substantive ESOP rules, rates, and thresholds unchanged. Two changes are confirmed and relevant here: TDS on salary, including the ESOP perquisite, moves from Section 192 to a consolidated Section 392, and the Section 80-IAC startup tax holiday moves to Section 140. Perquisite computation continues to sit within Section 17. For any transaction executed on or after 1 April 2026, cite the Income Tax Act, 2025 section; for anything executed before that date, the Income Tax Act, 1961 citation governs. This article cites the 1961 Act numbers throughout because they remain the reference most professional and departmental guidance still uses, with the 2025 Act equivalents noted wherever confirmed.

When does SEBI require or favour the trust route for listed companies?

For listed companies, the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 govern every scheme, and the trust route is mandatory whenever the scheme involves secondary market acquisition of shares: a listed company can implement a secondary acquisition ESOP only through a trust, with the trust’s annual acquisition capped at 2 percent of the company’s paid-up equity capital in any financial year, and its aggregate holding for this purpose capped at 5 percent of paid-up equity capital. For fresh allotments, listed companies can still choose the direct route, but most large listed issuers run trust structures because it lets them manage both primary and secondary shares under one vehicle.

A pending development worth tracking: the Corporate Laws (Amendment) Bill, 2026 proposes widening Section 62(1)(b) of the Companies Act, 2013 to expressly cover other share-value-linked schemes such as stock appreciation rights and RSUs, alongside ESOPs. This is a Bill, not yet enacted law as of this writing, and does not change the trust-route analysis above, but companies designing a scheme that mixes ESOPs with SARs or RSUs should watch for its passage.

Two amendments in the second half of 2025 changed this landscape and have not yet made it into most public explainers. First, the SEBI (Share Based Employee Benefits and Sweat Equity) (Amendment) Regulations, 2025, notified on 8 September 2025, inserted Regulation 9A, which lets a founder who received ESOP grants as an employee, and who is later identified as a promoter in the draft red herring prospectus at least a year after those grants were made, retain and exercise those pre-existing grants on their original terms. This directly affects any pre-IPO company whose ESOP trust holds founder-linked grants. Second, the SEBI (Share Based Employee Benefits and Sweat Equity) (Second Amendment) Regulations, 2025, effective thirty days after gazette publication in December 2025, replaced merchant bankers with independent registered valuers under Regulation 34 for all fresh valuations, with merchant bankers permitted only a nine-month window to complete assignments already in progress. Any company preparing a trust-route valuation after this window closed should confirm its valuer is a registered valuer under Section 247 of the Companies Act, 2013, not a merchant banker, or the valuation itself becomes a compliance gap.

For unlisted private companies, none of this SEBI framework applies; only the Companies Act and the MCA rules discussed earlier govern the trust. Founders sometimes assume the SEBI valuer change applies to their private company trust as well; it does not, until the company lists.

Listed companies running a trust route carry one further compliance layer that direct-route schemes rarely surface: the trust and its trustees are typically connected persons or designated persons under the SEBI (Prohibition of Insider Trading) Regulations, 2015. Per SEBI’s guidance note dated 24 August 2015, exercise of ESOPs is not treated as “trading” for the purpose of the six-month contra-trade restriction under Chapter III of the PIT Regulations, but the subsequent sale of those shares by the trust, or by the employee, remains fully subject to standard trading window closures and pre-clearance requirements. A trust running a periodic internal purchase or transfer window needs its own trading window discipline layered on top of the Rule 16 and SBEB conditions already covered above; treating the trust as exempt from PIT compliance because it is administering an employee scheme is a common, and incorrect, assumption.

How does the trust route change FEMA compliance for NRI and overseas employees?

The underlying employee-facing tax position under FEMA does not change based on route; what changes is which transaction category and reporting form apply, and this is where trust-route schemes with NRI, OCI, or other overseas beneficiaries need a separate compliance check rather than assuming the direct-route treatment carries over.

Under the direct route, a fresh allotment by an Indian company to a non-resident employee falls under Schedule I of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, and is treated as a foreign investment transaction. The company needs a valuation certificate no older than 90 days as on the date of allotment and reports the allotment as it would any other issuance to a non-resident. Under the trust route, when the trust, rather than the company, transfers already-issued shares to an NRI or OCI employee, this is structurally a transfer of shares from a resident (the trust) to a non-resident (the employee), which is reported through Form FC-TRS with an Authorised Dealer bank within 60 days of the transfer, and is subject to the pricing condition under Rule 21(2)(a)(ii) of the NDI Rules, 2019, that the transfer price must not be less than fair market value.

This distinction has two practical consequences companies often miss:

• The reporting form changes from an issuance-linked filing to Form FC-TRS, and the trust, not just the company, becomes a party the Authorised Dealer bank will ask questions of
• Whether the concessional or nil exercise price typical of an ESOP survives the “not less than fair value” pricing condition that ordinarily governs a resident-to-non-resident transfer is not explicitly settled in published RBI guidance for the trust fact pattern, even though it is well established for a direct company allotment

Companies with, or planning, NRI or OCI participants in a trust-route scheme should get a specific FEMA opinion on the transfer leg before the first such transfer, rather than extend the direct-route analysis by assumption. This is a narrow but recurring gap in cross-border cap tables, particularly for companies with a founding team or senior hires who moved abroad after their original grant.

Which route should you choose at each funding stage?

There is no universally correct route; the right one tracks employee count, cap table stability needs, and how close the company is to a liquidity event, more than it tracks company size alone.

• Seed to Series A: stay on the direct route. Employee count is low, exercise events are infrequent, and the administrative overhead of a trust (deed, PAN, bank account, annual accounts) outweighs any liquidity benefit employees would actually use.
• Series B to Series C: this is the inflection point. If the ESOP pool has grown past roughly 50 to 80 active grantees, or the company anticipates a secondary sale where departing early employees need an exit route, evaluate the trust route now, ahead of the next round, so the trust is already in place when the round closes.
• Series D and pre-IPO: the trust route becomes close to standard. Companies at this stage typically want periodic internal purchase windows so employees do not have to wait for an IPO for any liquidity, and investors doing due diligence at this stage will specifically ask whether an ESOP trust exists and how it is funded.
• Post-listing: the trust route is effectively mandatory for any secondary-market ESOP acquisition under the SBEB Regulations, and most listed issuers keep a standing trust for both primary and secondary pools.

Common mistakes that cost founders time and money

Funding the trust without a special resolution. Boards sometimes authorise trust funding through an ordinary board resolution, treating it like routine working capital. Rule 16 requires a special resolution with specific disclosures; a funding transaction done without it is void as against the Section 67(2) prohibition, not merely a procedural lapse to be cured later.

Assuming the private company exemption survives the first priced round. As set out earlier, the 5 June 2015 MCA exemption falls away once any body corporate has invested in the company’s share capital or its borrowings cross the prescribed threshold. Companies that funded a trust informally under the exemption, then took institutional money, and never revisited Rule 16 compliance, carry an unresolved gap that surfaces in Series B or C due diligence.

Ignoring the trust’s own tax filings. An ESOP trust is a separate assessee, files its own return, and needs a PAN, bank account, and annual accounts. Founders who treat the trust as a passthrough with no independent compliance obligations under-resource this and end up scrambling before the annual audit.

Letting trustee independence lapse. Section 67(3) bars directors, KMP, promoters, or anyone holding 10 percent or more of paid-up capital from being a trustee. As founders’ equity stakes shift after multiple rounds, or as a founder moves into a formal directorial role, a trustee appointment that was compliant at inception can become non-compliant without anyone noticing, until an auditor or an investor’s legal counsel flags it.

Not pricing the company-to-trust and trust-to-employee legs consistently. Where the value at which shares move to the trust and the value at which the trust later transfers them to employees diverges without documented reasoning, this is precisely the fact pattern that has drawn tax department scrutiny on employer deduction claims, as discussed above.

Treelife’s practitioner note

In the ESOP structuring engagements we have run at Treelife, the single most common trigger for a direct-to-trust conversation is not company size, it is an upcoming secondary sale where five or six early employees want to exit alongside an investor round, and the founders realise there is no clean mechanism to route that liquidity without a trust holding the shares first.

The pattern practitioners see and generic guides miss: companies converting to the trust route mid-cycle almost always underestimate the timeline for the Rule 16 special resolution and registered valuer report to be in place before the funding round’s own long-stop date, and end up either delaying the trust setup to the next round or running the secondary sale directly between shareholders as a workaround, which then has to be unwound and re-papered once the trust is finally operational. We also flag the December 2025 SEBI Second Amendment early to every listed and pre-IPO client, because a trust valuation dated after the effective date, done by a merchant banker rather than a registered valuer, is a defect a due diligence team will find, and unwinding a completed valuation is materially more expensive than commissioning the correct one the first time.

Case Study

Situation: A Series C fintech company based in Mumbai, with roughly 90 employees holding vested but unexercised options under a direct-route scheme running since seed stage.

Challenge: The board wanted to offer a secondary liquidity window to early employees ahead of the round closing, but the direct route had no vehicle to hold or transfer shares outside of individual company allotments, and the round’s long-stop date left under eight weeks to act.

What Treelife did: Structured and registered an ESOP trust under Rule 16, drafted the special resolution and disclosures, coordinated the registered valuer report, and sequenced the trust funding to close before the round’s long-stop date.

Outcome: 22 employees participated in the trust’s purchase window within six weeks of the trust becoming operational, and the company closed its round with a clean, board-approved trust structure already visible in its data room, avoiding a separate round of investor queries on the point.

FAQs on Direct Route vs Trust Route for ESOP

Q: How is ESOP perquisite tax calculated under the trust route?
A: The same way as the direct route. The taxable perquisite is the fair market value of the share on the date of exercise, less the exercise price paid, taxed as salary income under Section 17(2)(vi) of the Income Tax Act, 1961 (Section 17 of the Income Tax Act, 2025, from 1 April 2026), regardless of whether the shares came from the company or from a trust.

Q: What is the capital gains tax rate when I sell ESOP shares issued through a trust?
A: For unlisted shares held over 24 months, long-term capital gains are taxed at a flat 12.5 percent without indexation under Section 112, for transfers on or after 23 July 2024. Shares held 24 months or less are taxed as short-term gains at the seller’s slab rate.

Q: What does it cost to set up and run an ESOP trust in India?
A: Setup costs cover trust deed drafting and registration, a registered valuer’s report, and legal fees for the special resolution and scheme documentation. Running costs add a separate bank account, annual accounts, an independent audit, and the trust’s own income tax return each year, on top of whatever the company already spends administering the direct route scheme.

Q: How long does it take to set up an ESOP trust route from scratch?
A: Typically four to eight weeks end to end, covering trust deed drafting and registration under the Indian Trusts Act, 1882, the special resolution process under Rule 16, obtaining the trust’s PAN and bank account, and commissioning the registered valuer’s report, assuming no unresolved cap table or shareholder approval issues.

Q: What documents does the trust route require that the direct route does not?
A: A registered trust deed, the special resolution and its explanatory statement under Rule 16, the trust’s own PAN and bank account records, annual trust financial statements, and a registered valuer’s report for each funding or share transfer event.

Q: Do I need a fresh Form PAS-3 filing under the trust route?
A: Yes, whenever the company allots fresh shares to the trust itself. Once shares are already in the trust’s pool and it transfers them to an employee, that transfer is between the trust and the employee, and does not itself trigger a fresh PAS-3 filing by the company.

Q: Does the trust route change FEMA compliance for NRI employees?
A: Yes, the reporting form and pricing condition change from a direct-route issuance to a resident-to-non-resident transfer reported on Form FC-TRS, as covered in the FEMA section above. The trust deed and scheme documents should also expressly permit transfers to non-resident beneficiaries.

Q: Can an ESOP trust hold shares on behalf of an overseas employee of an Indian subsidiary?
A: Yes, provided the scheme document specifically includes overseas group employees as eligible beneficiaries, the cross-border grant and exercise mechanics are addressed in both the Indian company’s scheme and any overseas equity plan it mirrors, and the FC-TRS pricing condition discussed above is checked before the first transfer.

Q: Does the trust route change the stamp duty payable compared to the direct route?
A: Yes. The direct route attracts stamp duty once, at 0.005 percent on issue. The trust route attracts that same 0.005 percent when the company funds or allots to the trust, plus a further 0.015 percent when the trust later transfers shares to the employee, since that transfer is a separate dutiable event under the Indian Stamp Act, 1899, as amended.

Q: Can promoter family members be trustees of the ESOP trust?
A: No, if they are also directors, key managerial personnel, or promoters of the company, or beneficially hold 10 percent or more of paid-up capital, under Section 67(3) of the Companies Act, 2013. An independent professional or corporate trustee is the standard choice precisely to avoid this conflict.

Q: Does the trust route affect the Section 80-IAC tax deferral for DPIIT-recognised startups?
A: The deferral itself, available only where the employer holds both DPIIT recognition and a Section 80-IAC certificate from the Inter-Ministerial Board, is not disqualified by using a trust. It pushes the employee’s TDS liability to the earliest of 48 months from the end of the assessment year of allotment, sale of shares, or cessation of employment. Employers should confirm their tracking systems key the deferral off the employee’s actual exercise date from the trust, not the company’s grant date, to avoid mismatched TDS timing.

Q: What happens to trust-held shares if an employee resigns before exercising options?
A: Unvested options lapse per the scheme’s forfeiture terms, exactly as under the direct route. Vested but unexercised options typically must be exercised within the scheme’s post-termination window (commonly 90 days), failing which they lapse back into the trust’s pool for future grants, rather than back to the company’s authorised capital.

Q: How do investors view the ESOP trust route during due diligence?
A: Investors generally view a properly documented trust route as a governance positive, since it signals internal liquidity planning. What draws scrutiny is a trust that was funded without the Rule 16 special resolution, or one where trustee independence has lapsed, both of which are recurring findings in Series B and later due diligence.

Q: Does an acquirer need to deal with the ESOP trust separately in an M&A transaction?
A: Yes. The acquirer typically negotiates directly with the trust and its trustees on how outstanding trust-held shares and unexercised options are treated in the transaction, in addition to negotiating with individual option holders under a direct-route scheme, and this adds a distinct workstream to the transaction documentation.

Q: Are promoters eligible to hold ESOP grants under the trust route?
A: Promoters are generally excluded from eligibility under both the Companies Act framework and, for listed companies, the SEBI SBEB Regulations, 2021. The narrow exception under Regulation 9A, inserted in September 2025, allows a person who received grants as an employee and was only later identified as a promoter in the IPO offer document, at least a year after the grant, to retain and exercise those specific pre-existing grants.

Q: What happens to the trust route if the company converts from private to public and lists?
A: The trust continues to operate, but the company must bring its scheme and trust valuation practices in line with the SEBI SBEB Regulations, 2021, including the registered valuer requirement introduced by the December 2025 Second Amendment, rather than relying on the Companies Act and MCA rules that governed it as a private company.

Regulatory references

• Section 62(1)(b), Companies Act, 2013 (further issue of shares to employees; a Corporate Laws (Amendment) Bill, 2026 proposing to widen this section for SAR- and RSU-linked schemes is pending, not yet enacted)
• Section 67(2) and Section 67(3)(b), Companies Act, 2013 (restriction on financial assistance and the employee trust carve-out)
• Section 68, Companies Act, 2013 (statutory buyback of shares, distinct from a trust-funded internal purchase)
• Rule 12, Companies (Share Capital and Debentures) Rules, 2014 (conditions for issue of ESOS)
• Rule 16, Companies (Share Capital and Debentures) Rules, 2014 (conditions for funding an employee trust)
• MCA notification dated 5 June 2015 (Section 67 exemption for private companies, subject to conditions)
• Indian Trusts Act, 1882 (trust registration and governance)

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Treelife

Treelife Team | support@treelife.in

We are a legal and finance firm with a deep focus on the startup ecosystem. We offer a wide range of services, including Virtual CFO, Legal Support, Tax & Regulatory, and Global Expansion assistance.

Our goal at Treelife is to provide you with peace of mind and ease in business.

Reviewed By

Dhaval Sheth

Chief Growth Officer

Drives business development and strategic partnerships for Treelife, with strong oversight across tax structuring, client advisory, and growth strategy.