FAQ

PRE AND POST FUNDING COMPLIANCES

1. What company needs to do if any fund received?

When a company receives funding, it has to a give a piece of equity/preference shares to its investors in exchange, by allotment of shares.

2.Can a company issue shares to foreign investors?

Yes, but subject to the provisions of the Foreign Exchange Management Act, 1999 and rules and regulations made thereunder.

3.What is the time period to make allotment of shares?

Within 60 days of receiving the funds.

4.Is any document need to file with ROC for allotment of shares?

Yes, return of allotment.

5.What is the time period to file return of allotment with ROC?

Within 30 days of allotment.

6.Whether company needs to issue share certificates for such allotment?

Yes.

7.What is the time period to issue share certificates?

Within 2 months of allotment.

8.Is it mandatory to pay stamp duty on issue of share certificates?

Yes, stamp duty amount will be differ from state to state. In case of Delhi & Haryana stamp duty will be paid at Rs. 1 (Rupee One) per Rs. 1000/- (One Thousand).

9.Is there any RBI compliance on raising funds from Foreign Investor(s)?

Yes, the company has to provide details in an “Advance Reporting Form” to the RBI.

10.What is the time period to provide details in an “Advance Reporting Form” to the RBI?

Within 30 days of receiving funds from foreign investor(s)

11.What documents need to file with Advance Reporting Form to the RBI?

Following documents required:

  • Copy KYC report on the non-resident investor from the overseas bank.
  • Copy of FIRC (Foreign investor remittance certificate)

12.What is the time period to make allotment of shares to foreign investor(s)?

Within 180 days from the date of receiving funds. 

13.Is company need to give information to RBI on issue of shares to foreign investor(s)?

The company has to report in specified form (FC-GPR) to the RBI, within 30 days from the date of issue of shares.

14.What documents required to file form (FC-GPR) with RBI?

Following documents required:

  • A Certificate from the Company Secretary.
  • A certificate from a Chartered Accountant indicating the manner of arriving at the price of the shares issued to the foreign investors.