Debt Syndication & Equity Fund Raising Advisory: After Approval: What Continues
Debt Syndication & Equity Fund Raising Advisory does not end at approval — a set of obligations continues afterwards. The questions below are the ones raised most often in practice; the full scope of the service is on the Debt Syndication & Equity Fund Raising Advisory page.
What is CCPS and why is it commonly used in Indian venture rounds?
CCPS (Compulsorily Convertible Preference Shares) are a hybrid instrument that carries preference rights (typically a fixed dividend and priority on liquidation) until conversion, and compulsorily converts into equity shares — usually at a pre-agreed ratio — after a specified period or event. CCPS is the standard instrument for VC and PE investment in India, partly because FEMA pricing guidelines and Companies Act provisions are well-established for this instrument, and partly because it allows investors preferential rights during the pre-conversion window while still being treated as equity (not debt) for regulatory and capital structure purposes.
In practice: The conversion ratio and any anti-dilution adjustment mechanism embedded in CCPS terms deserve as much negotiation attention as the headline valuation — they determine the investor's actual final ownership stake, which can differ meaningfully from the number implied at the term sheet stage.
Do I need a formal valuation report for an equity fund raise?
For any equity allotment to a resident or non-resident investor, a defensible valuation basis is required — for FEMA pricing guideline compliance if any investor is a non-resident (shares cannot be issued below the fair value determined under an internationally accepted pricing methodology), and as general governance and negotiation discipline even for all-resident rounds. For a preferential allotment by an unlisted company, Rule 13 of the Companies (Share Capital and Debentures) Rules 2014 requires the price to be based on a registered valuer's report; for a non-resident investor, the FEMA valuation is prepared by a Chartered Accountant, SEBI-registered Merchant Banker or practising Cost Accountant. The income-tax charge on share premium ('angel tax', section 56(2)(viib)) was omitted by the Finance (No. 2) Act 2024, though income-tax valuation rules can still matter in other contexts — confirm the current position.
In practice: A valuation prepared to defend a number the founder already wants, rather than one that is independently defensible, tends to unravel exactly when it matters most — during investor diligence or a subsequent RBI/tax scrutiny.
What documents does PNPC prepare as part of an equity fund raise engagement?
The financial model and projections, the Information Memorandum or investor pitch deck, the cap table and use-of-funds presentation, and valuation basis documentation. During negotiation, we prepare a term sheet comparison and red-flag summary for any non-standard clauses. Post-term-sheet, we review the Share Subscription Agreement and Shareholders' Agreement against the agreed terms before execution, and handle the regulatory filings (PAS-3, FC-GPR) after closing.
In practice: We do not draft the SHA and SSA as primary legal counsel — that is typically the mandate of a transaction lawyer — but we review every clause from a CA's perspective for financial, tax, and FEMA implications that a generalist lawyer may not flag.
What ongoing compliance obligations arise after a debt facility is sanctioned?
Once a facility is disbursed, the borrower typically must submit periodic financial statements and stock/book-debt statements (for working capital facilities) to the lender as per sanction terms, maintain financial covenants (DSCR, current ratio, debt-equity ratio, and others as specified), and obtain lender consent before certain corporate actions (additional borrowing, change in shareholding beyond specified thresholds, dividend payment in some cases) if the sanction letter includes such conditions. Missing periodic reporting or breaching a covenant — even a technical breach with no missed payment — can trigger default clauses and cross-default provisions across other facilities.
In practice: We track covenant compliance on an ongoing basis for retainer clients specifically because covenant breaches are often discovered by the company only when the lender flags them — by which point the relationship and negotiating position have already been damaged. Proactive monitoring reduces this risk.
What ongoing compliance obligations arise after an equity round closes?
Post-closing obligations typically include: board meeting cadence and information delivery to investor board members or observers as per the Shareholders' Agreement, updated statutory registers and cap table reflecting the new allotment, Form PAS-3 filing with MCA within 15 days of allotment for a private placement (30 days for other allotments), FC-GPR filing within 30 days if any investor is non-resident, and — for any company with foreign shareholding — the Annual Return on Foreign Liabilities and Assets (FLA return) to the RBI by 15 July each year regardless of whether there was any transaction during the year.
In practice: The FLA return is one of the most commonly missed post-fundraise obligations because it is an annual filing, unconnected to any specific transaction date, and easy to forget a year after the excitement of closing has passed. We add it to the client's compliance calendar the day the round closes.
Why should we engage PNPC rather than approach lenders or investors directly ourselves?
Founders and promoters can absolutely approach lenders and investors directly — many do. What a practising CA firm adds is: a financial case prepared to the standard a credit committee or investment committee actually expects, an independent view on which instrument and structure genuinely fits the business, negotiation support on the terms that matter beyond the headline number, pre-emptive resolution of compliance and documentation gaps before diligence exposes them, and continuity — we remain your CA for the compliance obligations that follow closing, not just for the transaction itself.
In practice: We are candid that some businesses do not need an advisor for every capital raise — a simple, small working capital renewal from an existing relationship bank is often handled fine directly. Where advisory adds real value is in new-lender introductions, priced equity rounds, blended structures, and any raise involving cross-border elements.
Where this sits in the wider engagement
Debt Syndication & Equity Fund Raising Advisory rarely arrives on its own. The statutory basis and the current requirements are set out on the Debt Syndication & Equity Fund Raising Advisory service page, and the related services are grouped under Corporate Finance.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On Debt Syndication & Equity Fund Raising Advisory we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.