Article · 14 min read

The iSAFE Option to Startup Funding: Legality and Taxation

Vinod Kothari Consultants Free Advanced India

When your investor insists on a SAFE, this is the piece that shows how the Indian version actually gets built: iSAFE lives as Compulsorily Convertible Preference Shares under the Companies Act 2013, and it walks the legality and the tax side (Section 56 angle) that a company secretary will raise. Read it before you sign anything so you know whether to structure a CCPS locally or seriously consider flipping to Delaware or Singapore.

  • iSAFE only works because it is dressed as CCPS under the Companies Act, a raw US SAFE has no legal home in India
  • Only companies that can issue shares can use the mechanism, and conversion triggers include priced rounds, mergers, or a time expiry
  • Tax treatment (including the Section 56 angle at conversion) is a real cost to model, not an afterthought
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The question it answers

  1. Can I even use a SAFE in India, or do I have to do a CCPS or convertible note?

Read with it

  1. A practising senior partner spells out exactly why a raw US SAFE is dangerous for an Indian entity: it can be treated as a... Bar & Bench Article · 10 min read Convertible Notes and SAFE Notes in India: The Dilemma Madhavan Srivatsan
  2. This is the current RBI convertible note rulebook in one place, and it reflects the 2023 FEMA amendment that most older... TaxTMI Article · 11 min read Convertible Notes for Foreign Investors in Indian Startups: The 2026 Rules Explained TaxTMI editorial
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