Funding Compliances
When funds are received by an Indian entity/Company for the purpose of carrying out its operations, there are lot of funding compliances which need to be ensured in order to execute the transaction.
The first thing that needs to be determined is that whether the funds are to be treated as Share Capital, Debt or Convertibles. Choosing which form is best for your Company totally depends on the structure and future plans of the entity. The compliances also differ in each of the cases and need to be analysed in terms of the cost and time involved.
For instance, if a Company receives funding in the form of Share Capital, it has to a give a part of equity to its investors in exchange, by allotment of shares. There are various methods through which such share allotment can be carried out. But, one has to ascertain which method to opt for, considering the type of investor and the cost for the compliance.
Whether the inflow of funds is domestic or foreign and whether you want to treat the same as Capital, Debt or Convertibles, VenturEasy can help you with all required Funding Compliances.
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Funding Compliances for Indian Companies
Our experts at VenturEasy provide complete advisory on the treatment of funds to be infused from all perspectives.
Rights Issue of Shares
This process can be easily adopted when further funds are being received from existing shareholders of the Company. Rights Issue of Shares is most affordable process which is easy to comply with and less time consuming.
Preferential Allotment or Private Placement of Securities
This method can be adopted when funds are received from select group of person(s) apart from the existing shareholders. It involves substantial documentation including valuation of shares. Our professionals, being experts in this domain can help sail through these procedures easily and smoothly.
Issue of Debentures or Convertibles
A Company can also opt for raising funds through debentures or convertibles depending upon the long term plans of the investor and the Company, stage of growth and terms and capacity of repayment. The process adopted is that of Private Placement of securities.
RBI Compliances on foreign funds
A two stage reporting procedure is adopted when funds are received from outside India in the form of Share Capital. It involves filing of "Advance Reporting Form" and "FC-GPR" forms within specified timelines and also an Annual Reporting of funds received during the year.
RBI Compliances on External Commercial Borrowings
Various RBI regulations and FEMA guidelines are applicable if such external borrowing is made. ECB's refer to commercial loans in the form of bank loans, buyers' credit, suppliers' credit and shareholder's loans availed by an Indian borrower from non-resident lenders.
Advisory on Funding Compliances
VenturEasy provides complete advisory on the valuation of shares for the purpose of allotment, determining the most suitable method of valuation and funding, guidance on RBI and MCA Compliances so that your business is compliant as per the law without any defaults.