Allotment deadlines under the Companies Act
- Subscription money must come from the investor's bank account into a separate bank account of the company.
- Shares must be allotted within 60 days of receiving the money. Otherwise it must be refunded within the next 15 days.
- For a private placement, the return of allotment in PAS-3 is due within 15 days of allotment.
- Where authorised capital is not enough, increase it first with SH-7.
Foreign investment reporting under FEMA
| Event | Filing | Due |
|---|---|---|
| Issue of shares, CCPS or CCDs to a person resident outside India | FC-GPR on RBI's FIRMS portal | Within 30 days of issue |
| Transfer between a resident and a non-resident | FC-TRS | Within 60 days of receipt or remittance of consideration |
| Any company with foreign investment | Annual return on foreign liabilities and assets (FLA) | 15 July each year |
Pricing must respect the FEMA (Non-Debt Instruments) Rules: for an unlisted company, an issue to a non-resident cannot be below the fair value set by a chartered accountant, SEBI-registered merchant banker or practising cost accountant. Late reporting attracts a late submission fee, or compounding with the RBI.
Demat for private companies
Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules requires private companies, other than small companies, to issue securities only in demat form and to enable demat of existing holdings. Holders must demat their shares before transferring them or subscribing to new ones.
We arrange the registrar and transfer agent, the tripartite agreements with NSDL and CDSL, the ISIN, and the conversion of existing holdings.
CCPS and CCDs
Compulsorily convertible preference shares and debentures are the usual instruments for startup rounds. We draft the terms, resolutions and offer documents, and make sure the conversion formula meets FEMA pricing rules where investors are non-residents.
Questions we are asked
We missed the 30-day FC-GPR deadline. What now?
The filing can still be made with a late submission fee calculated by the RBI. The sooner it is filed, the lower the fee. Talk to us before filing so the delay is handled correctly.
Is our company a small company exempt from demat?
That depends on paid-up capital and turnover against the current small-company limits, and on whether you are a holding or subsidiary company. We check this for you.