Raising capital is a milestone for any startup, but the compliance work begins immediately after the money hits your bank account. Indian startups that receive investment, whether from angels, VCs, or foreign investors, must complete a series of mandatory filings within strict deadlines. Missing these can result in penalties, FEMA violations, and complications in future funding rounds.
Immediate Actions (Within 30 Days of Receiving Funds)
| Action | Deadline | Form/Document | Filed With |
|---|---|---|---|
| Advance Reporting (if foreign investment) | 30 days from receipt of remittance | ARF (Advance Reporting Form) | AD Bank → RBI |
| Board Resolution for Share Allotment | Before allotment | Board Minutes | Internal records |
| Share Allotment | Within 60 days of receipt | Board Resolution + Return of Allotment | ROC |
| PAS-3 (Return of Allotment) | Within 15 days of allotment | Form PAS-3 | ROC via MCA portal |
| FC-GPR (if foreign investment) | Within 30 days of allotment | Form FC-GPR | AD Bank → RBI |
Documentation Requirements
- Valuation Report: From registered valuer using DCF/NAV methodology (DPIIT startups exempt from pricing norms)
- CS Certificate: Practising CS certification for FC-GPR filing
- KYC of Investors: Passport, address proof, bank details for foreign investors
- Shareholders Agreement: Executed SHA with all parties
- Share Certificates: Physical or demat certificates issued to new shareholders
- Updated Register of Members: Reflecting new shareholding pattern
Within 60-90 Days
- Update Share Capital: If authorized capital increased, file SH-7 with ROC
- MGT-14: File board and shareholder resolutions with ROC within 30 days
- Stamp Duty: Pay applicable stamp duty on share certificates (varies by state)
- Update Statutory Registers: Register of members, register of share allotment
- Issue Share Certificates: Must be issued within 2 months of allotment
Annual Obligations After Fundraising
- FLA Return: Annual Foreign Liabilities & Assets return by July 15 (if FDI received)
- Updated MGT-7: Annual return reflecting new share capital and members
- Updated AOC-4: Financial statements reflecting investment received
- Transfer Pricing: If related party transactions with foreign entities
Frequently Asked Questions
What is the first thing to do after receiving investment?
File the Advance Reporting Form (ARF) with your AD Bank within 30 days of receiving foreign remittance. For domestic investment, the immediate step is passing a board resolution for share allotment.
What happens if PAS-3 is filed late?
Late PAS-3 filing attracts a penalty of ₹1,000 per day of delay. Additionally, the ROC may refuse to accept the filing after significant delay, requiring a compounding application through NCLT.
Need help with this in practice?
CS Sapna Malpani is a Practising Company Secretary in Bengaluru advising companies and startups on ROC and FEMA compliance, secretarial audit, incorporation and corporate governance. Book a consultation to discuss your specific requirement.