The set of compliances a company has to do while raising equity capital are referred to as funding compliances. This comprises of one or more of the following:

• Increase in authorised share capital, if needed
• Issue of shares by Rights issue or Private placement of shares (mandatory)
• Valuation certificate by a CA (mandatory)
• Shareholder agreement (not mandatory)
• Filing of FC-GPR with the RBI in case of money coming from outside India

Tax filings and returns are mandatory and needed to be done by every business for which they are applicable.

Some of the compliances are mandatory and needed to issue shares to the incoming investor while others are recommended to ensure protection of rights of the shareholders in the future

Yes, we can. We have professionals with rich experience of working on deals related to funding, cross border transactions, joint ventures, mergers and acquisitions. They bring in the expertise and experience of working with founders and investors, advising them on these deals. You can leverage their expertise to finalize the terms of your investment

Share transfer is the transfer of share from an existing shareholder to the investor. The money in this case goes to the shareholders selling their shares. They will need to pay the applicable income tax. In the case of Rights issue or Private placement of shares, fresh shares are issued by the company in lieu of the investment amount.

In case the company is using the Private placement of shares method to raise capital, a separate bank account should be used to receive the investment.
In case the company issues shares via Rights issue, the investment can come to the company’s primary bank account.

No. The shareholders and Directors are two different concepts in a Private Limited company which are independent of each other. Unless the SHA binds the company to offer certain number of seats in the Board to the investor, making the investor (or their representative) a Director is the company’s call.

Yes. However, the investors will have to pay Capital Gains Income Tax on the difference of Valuation of the company and actual price paid for the share. You cannot issue the shares at lesser price than the Valuation of the company to foreigners and foreign companies

Yes. However the company has to pay Income tax on the gain it achieved in doing so.

Preferential share is a share which entitles the holder to a fixed dividend, whose payment takes priority over that of ordinary share dividends but is below that of debtors.
Yes, the process of issuing preference shares is same as that of issuing common shares. However, the Authorized share capital should have a partition called Preferential share capital. In case this does not exist, this should be created in the Authorized share capital.

A shareholding agreement defines the relationship and rights of the shareholders.It is not a mandatory document but is recommended to have one. It is better to define the terms of the relationship at the start (no matter how cordial the relationship is) and ensure not only smooth functioning but protection of rights if things do not go as planned. Any disputes that might arise, are resolved based on the Shareholding Agreement. Hence not drafting a Shareholder Agreement or a poorly drafted agreement might haunt all the parties involved later.

A co-founder agreement is signed by the co-founders of a company who are actively involved in the on-ground execution. It defined the terms, rights and exit options for each of the co-founder. While it is not mandatory to have a co-founder in place, it is recommended to have one.

No. We do not help in raising capital. However, once you have identified an investor who has agreed to invest in your company, we can support you through the finalizing of the investment terms and help you take care of all the paperwork.

Yes. We help companies take care of the compliances while raising debt funding.