Pre Funding and Post Funding Compliance Checklist
Pre Funding Checklist
SEBI (Alternative Investment Funds) Regulations, 2012 (amended in 2013) has denoted certain compliance factors for obtaining funds from angel investors. Before you go to an angel investor to request for funding, here are some compliance points that you need to keep in mind:
| Your company should be incorporated within three years of establishment |
| Your company should not be listed in the stock exchange |
| The annual turnover should be less than Rs. 250 million |
| Your company should not be associated or promoted by any company or industrial group that has an annual turnover of over Rs. 3 billion |
| The ticket size of the deal needs to be from Rs 5 to 50 million |
| Your company should be compliant with the Registrar of Companies |
| Should have conducted Board Meeting regularly and minutes of meetings maintained |
| An Extra Ordinary General Meeting needs should be held |
| All the Board Members need to approve the proposal for requesting angel investors for capital |
| Offer letters need to be issued to the angel investors |
| Within 30 days of issue of the offer letter, the Preferential Allotment record needs to be filed with the Registrar of Companies |
Compliance maintenance can be difficult and tedious. Even the smallest rule and regulation may have a huge impact on you gaining capital for your business. So, preferably avail investment management services offered by Set My Company.
Post Funding Compliance
Now that you have issued the offer letters and filed the record of Preferential Allotment with the Registrar of Companies, you need to start working on the allotment of shares to investors. In case, you have any difficulty with these post-funding compliance measures, we suggest you avail of the investment compliance services in India offered by Set My Company.
Here’s the checklist of post-funding compliance with the Registrar of Companies for start-ups
| All the board members of the private limited company need to pass a resolution regarding the allotment of shares in a board meeting |
| The shares need to be allotted within 60 days of receiving the funds |
| Within 30 days of receiving the funds, the return of allotment has to be registered with the Registrar of Companies |
| The return of allotment needs to have the name and addresses of the shareholders. It should also have details regarding the percentage of shares. |
| After the allotment process is completed, the company can issue share certificates to the investors |
The checklist for post-funding compliance with the Reserve Bank of India is as follows:
This compliance is essential for companies in India that are receiving funds from foreign investors.
Within 30 days of receiving the fund, the company needs to submit a fully filled Advance Reporting Form to the Reserve Bank of India. This form will require details such as the name and address of the investor, date of receiving the funds, amount of investment received, and KYC of the overseas investor. The company should also provide any relevant documents regarding government approval as well as the details of the financial institution through which the funding was received.
Within 180 days of receiving funds, the company has to issue the shares. Else, it will be considered as a violation of the Foreign Management Act (FEMA) regulations.
Within 30 days of issuing shares, the company has to submit the FC-GPR form to the Reserve Bank of India.
