Insights
Private Markets Intelligence
Guides on ESOP taxation, cap tables, secondary transactions, and India's private market ecosystem.
What is Form No. MGT-1 - Register of Members?
Form No. MGT-1 is the mandatory statutory Register of Members that every company incorporated in India must maintain under Section 88(1)(a) of the Companies Act, 2013 and Rule 3(1) of the Companies (Management and Administration) Rules, 2014. This register contains complete details of all shareholders including their name, address, shares held, folio number, date of becoming a member, date of ceasing to be a member, and any transfers or transmissions. The register must be maintained at the com
Stamp Duty on Share Transfer in India: Complete State-wise Guide (2026)
What is Stamp Duty on Share Transfer? Stamp duty on share transfer is a state-level tax payable when ownership of shares changes hands through sale, gift, or other transfer mechanisms in India. The duty is calculated as a percentage of the transaction value or market value (whichever is higher) and varies significantly by state. For listed shares traded on stock exchanges where Securities Transaction Tax (STT) is paid, stamp duty is typically 0.015% on both buyer and seller sides. Physical sha
Stamp Duty on Unlisted Share Transfer: State Rates & Payment Guide (2026)
What is the Stamp Duty on Share Transfers in a private company? Stamp duty on unlisted share transfers ranges from 0.10% to 0.50% of transaction value depending on the state where the company is registered. Karnataka, Kerala, Goa, and Himachal Pradesh have the lowest rates at 0.10%, while Gujarat has the highest at 0.50%. * The buyer conventionally pays stamp duty, though this is negotiable in the Share Purchase Agreement (SPA). * Stamp duty must be paid within 3 months of executing the tran
What happens to Perquisite Tax paid on ESOP exercise if the company shuts down?
You exercised your stock options. You paid lakhs in perquisite tax on paper gains. The shares are now sitting in your name. And then the company shuts down or the valuation crashes or you realize those shares you paid tax on are worth ₹0. The question burning in your mind: Can I get that ₹3 lakh tax refund? I never actually made any money. The short answer that nobody wants to hear: No, the tax you already paid is not refundable. But there are ways to recover some of it through capital loss o
What is Rule 11UA Valuation for Unlisted Shares under Income Tax Rules, 1962?
What is Rule 11UA of Income Tax Act? Rule 11UA is the income tax regulation that determines Fair Market Value (FMV) for unlisted company shares in India. It mandates that FMV must be calculated using one of three prescribed methods, Net Asset Value (NAV), Discounted Cash Flow (DCF), or a weighted average of both, and must be certified by a merchant banker or chartered accountant. This FMV is used for calculating perquisite tax when employees exercise ESOPs (difference between FMV and exercise
What is Share Purchase Agreement (SPA)? Complete Execution Guide
The Share Purchase Agreement (SPA) is the binding legal contract that transfers ownership of unlisted shares from seller to buyer. Unlike Form SH-4 which is a standardised Companies Act form for recording the transfer, the SPA is a customised agreement that establishes the purchase price, payment terms, representations and warranties from both parties, conditions precedent to closing, indemnification obligations, and dispute resolution mechanisms. A properly drafted SPA protects both parties:
What is Form No. SH-4 (Share Transfer Form) Under Companies Act 2013
Form SH-4 is the mandatory share transfer instrument prescribed under Section 56 of the Companies Act, 2013 that must be executed whenever unlisted company shares change ownership through sale, gift, or any voluntary transfer. Form SH-4 provides evidence that: 1. The transferor (seller) agrees to transfer specific shares 2. The transferee (buyer) agrees to receive those shares 3. The consideration amount that has been agreed for the transfer 4. Both parties acknowledge the transaction via
Can the Board Reject Share Sales in Private Companies?
Boards in private companies can and often do reject share transfers as they have legal power to do so if the Articles of Association grant discretion. In the case of most private companies, their Articles do contain such provisions. However, this power is not unlimited. Rejections must be in good faith, for legitimate business reasons, and cannot be oppressive or discriminatory. If you're selling shares: * Check Articles and Shareholders Agreement first * Get ROFO/ROFR waivers before finding
Can a Company Prevent Employees from Exercising Vested stock options (ESOP)?
No, a company generally cannot prevent employees from exercising vested stock options unless the ESOP scheme or grant letter contains specific, legally valid conditions such as 1. Employment continuation required and you've left 2. Performance conditions not met 3. Blackout period in effect 4. Regulatory approvals pending 5. TDS not provided by employee 6. Clear mention that exercise is only possible during events like IPO, secondaries, etc. 7. Specified that exercising can only happen d
ESOPs vs RSUs: The Complete India Guide for Employees and Founders (2026)
ESOPs give you the right to purchase shares at a fixed price after vesting. You must pay the exercise price to convert options into shares. RSUs, by contrast, promise to deliver shares automatically upon vesting with no purchase required. In India, ESOPs are taxed at exercise, while RSUs are taxed at vesting. This timing difference creates distinct cash flow pressures, especially for employees at private companies where shares cannot yet be sold. The choice between the two typically reflects co
What Happens to Vested ESOPs If You Leave and They're Underwater?
When your vested ESOPs are underwater (exercise price higher than current Fair Market Value), leaving the company means you typically let them lapse. Exercising underwater options means paying more than the shares are worth, resulting in an immediate financial loss with zero tax benefit. In India, most ESOP schemes give you 30 to 90 days post-termination to exercise vested options. If FMV has dropped below your strike price, exercising makes no economic sense: you would pay ₹500/share to receiv
Secondary Transaction Due Diligence in India: The Complete 2026 Checklist
Summary: 10-Point Secondary Transaction Due Diligence Checklist Before finalising and transferring your money in any secondary transaction, verify: ✓ Board Approval: Confirmed in writing by the promoters or authorised personnel that board will approve the transfer of the shares ✓ AOA Review: ROFR/ROFO clauses identified and compliance verified ✓ Ownership Proof: Original share certificates or CMR verified ✓ Lien Check: Non-encumbrance certificate obtained