Did You Know? · Corporate & Commercial Contracts
Do you know startups get an ESOP relaxation that other private companies don't?
Recognised startups may issue ESOPs to promoters and directors holding more than 10% equity, unlike other private companies.
Ordinarily, a private company cannot issue ESOPs to a promoter or a director holding more than 10% equity. Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014 carves out an exception for a company recognised as a startup - a meaningful tool for founder-heavy cap tables in the early years.