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More about Funding compliances package

Elements of the funding compliance package

  • Increase in authorised share capital, if needed
    In case the authorised share capital of a company is not higher (enough) than the paid up capital of the company to have provision for issue of fresh shares, the authorised share capital needs to be increased.
  • 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

Best suited for

  • Startups raising angel and seed stage investment
  • Startups raising Series A investment
  • Small businesses raising equity investment from investors

Process Flow

Timeline 4-6 working days
  • Raise a request with us, discussion with Wazzeer team, share basic information
  • Review proposal and hire
  • Share details and documents
  • Start of the applicable and selected processes:
    • Increase in authorised share capital
    • Rights issue or private placement of shares
    • Valuation certificate
    • Shareholder agreement
    • FC-GPR, in case funding from foreign sources

Required Documents

  • DSC of any of the Directors of the company
  • KYC from bank for FC-GPR
  • Details of the investment

Key Deliverables

  • Increase in authorised share capital
  • Issue of shares
  • Share certificates
  • RoC filings
  • Valuation certificate
  • SHA
  • FC-GPR

Why choose Wazzeer?

  • One platform for all your requirements

    Incorporation is just the first step. Wazzeer supports you throughout your journey as an entrepreneur. Log in to get things done efficiently. A dedicated Account Manager offers the required human touch and acts as an advisor to you.

  • Experienced professionals

    Our professionals have at least 5 years of experience and have incorporated thousands of companies among them. The rich experience ensures that the process is smooth and right in the first go.

  • Defined process

    Over the last few years, doing over 500 incorporations, we have defined every step of the process. A virtual process is in place enabling us to deliver hassle free experience for you.

  • Cost Effective

    You pay what you see in the proposal. No surprises or hidden charges.

Frequently Asked Questions

  • Increasing the authorised share capita
  • Transfer of funds from the investor to the company
  • Issue of shares
    • This can be done by either Private placement of shares or Rights issue. The choice of method depends on the increase in paid up capital due to issue of shares to a single investor, as prescribed by the Company law.
    • Board resolutions and documents preparation
  • Valuation certificate
  • Singing of SHA and SSA
  • Issue of share certificates
  • Filing for FC-GPR, in case of investment from outside India
No, the process remains the same. However, for body corporate additional documents like the Charter documents of the Investing company, resolutions relating to investment intent and appointment of authorized person representing the body corporate will be needed.
In case of the investor being a foreigner (non-Indian passport holder), the process remains the same. However, the KYC documents of the foreign investor should be notarized and apostilled. Additionally, if foreign funds are being transferred then it is the responsibility of the investee company to report it to RBI by filing FC-GPR.
The authorised capital of a company is the maximum amount of share capital that the company is authorised by its constitutional documents to issue to shareholders (at book value). A company can decide its authorised capital and can increase it as an when needed.
Even after company being stricken off on account of filing Form-24, the liabilities of the Designated Partners exist for a further period of 2 years. In case any liability arises in this period of 2 years, Designated Partners are liable to pay the same.
Paid up capital of a company is the amount for which the company has issued shares to its shareholders for the equity capital they have invested in the company (at book value). This has to be less than or equal to the authorised share capital of the company.
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.
Share Certificates are issued to the shareholders by the company after paying the requisite stamp duty. In case the paid up capital of the company is less than Rs 50 lakhs, it is signed by the Directors of the company and for the cases where the paid up capital is more than Rs 50 lakhs, a Company Secretary (on the payroll of the company) needs to sign it.
Stamp duty for Share Certificates varies from state to state. However in majority of the states, the stamp duty is 1% of the investment amount.
Yes, the investor can use his Indian account to invest in the company as long as the source of that income lies in India. In case the amount is not earned in India, he will need to transfer the funds from his foreign account in foreign currency. In this scenario the company has to report this to RBI through FC-GPR.
This is dependent on the category of FDI your business lies in (dependent on the sector and nature of business). In cases where FDI can be brought in through automatic route no pre-approval or intimation to RBI is needed. Once the money comes to the company’s bank account, the RBI has to be informed about it with in 180 days through FC-GPR. However, the sectors or nature of business where pre-approval is needed, funds should not be transferred to the company’s bank account unless RBI’s approval is received.
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.
A Valuation certificate is certified by a CA. This certificate justifies the valuation you are seeking for your company. The CA will draw the financial projections for your business and comes up with a Valuation for the company using different valuation techniques. The IT department and RBI accepts that Valuation for the company.
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.

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