Can I issue equity to Indian founders or employees from my US entity?

Yes, Indian team members can receive equity from your US entity—but it requires careful handling on both the US and India sides. On the US side, it’s best to issue stock plans and grants directly through your cap table tool (like Pulley or Carta) to ensure seamless tracking and compliance. Early team members may be granted restricted stock; post-funding, use stock options with appropriate strike prices.

In India, equity exercise is treated as a capital investment under RBI’s ODI (Overseas Direct Investment) route via the Liberalized Remittance Scheme (LRS). Employees must remit funds using forms like 15CA/15CB, and your India subsidiary must complete ESOP-related filings (ESOP-1, OPI). TDS, transfer pricing charges, and income tax reporting (ITR-2) are all applicable. Contractors, however, generally cannot receive ESOPs due to regulatory restrictions.

While issuing equity to India-based employees is doable and common, it requires coordination with legal, tax, and compliance experts—which Inkle can help facilitate.

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