First Foreign CCPS Round in India: What Must Be Ready Before the Investor Wires Funds

Reviewed: 4 November 2026  |  Law: FEMA, 1999; FEM (Non-Debt Instruments) Rules, 2019 (rule 21, Schedule I); FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 (regulation 4); Companies Act, 2013 (ss. 42, 55, 62(1)(c)); Companies (Share Capital and Debentures) Rules, 2014 (rule 13); Companies (Prospectus and Allotment of Securities) Rules, 2014 (rule 14)  |  Author: CA V. Viswanathan, FCA, ACS, CFE, IBBI Registered Valuer (IBBI/RV/03/2019/12333)

This guide is written for the week between a signed term sheet and the wire. It is organised as the questions founders put to us at that point, answered first, with the statutory basis after each answer. Where a step depends on your bank or your investor's structure it says so; nothing here is a substitute for the review of your own term sheet.

Table of Contents

1. What must be ready before the investor wires?
2. Can the FEMA certificate show a lower value than my domestic round?
3. Registered Valuer report, merchant-banker DCF, or both?
4. Can a pre-revenue method (Berkus, scorecard) be used for FEMA pricing?
5. We have no revenue and only management forecasts — what will the valuer need?
6. The conversion formula changed after the valuation was signed — what is redone?
7. Closing slipped — which date matters for the valuation's validity?
8. Two investors wiring on different dates — one allotment or two?
9. Funds credited, remitter KYC pending — which clocks are already running?
10. FX left us short of the rupee subscription — can we still allot?
11. PAS-3 filed but the bank says the FC-GPR share count or premium differs
12. FIRMS rejects the KYC upload close to the deadline
13. FC-GPR filed late: Late Submission Fee or compounding?
14. The fund administrator wires but the fund is the subscriber
15. What shows the valuation was independent — and can one report serve FEMA, tax, Ind AS 102 and diligence?
16. When this guide does not apply
17. Next step: pre-remittance review

1. We are closing our first CCPS round with a Singapore investor. What must be ready before the investor wires?

Answer: Five documents and one bank confirmation, in this order.

Item	Who signs / issues	Legal basis	Why it must precede the wire
Sector and route check (automatic / government; Press Note 3 of 2020 for investors with beneficial owners in a land-border country)	Company with adviser	NDI Rules, Schedule I and rule 6	A government-route receipt without approval cannot be allotted and must be refunded
Registered Valuer report fixing the floor price for the preferential allotment	IBBI Registered Valuer	s.62(1)(c) Companies Act; rule 13(2) Share Capital and Debentures Rules	The special resolution must state the price "determined on the basis of a valuation report of a registered valuer"
FEMA pricing certificate — issue price and the CCPS conversion price or formula at or above fair value by an internationally accepted methodology	CA, SEBI merchant banker or Cost Accountant	Rule 21 NDI Rules; RBI Master Direction on Foreign Investment (pricing guidelines)	The AD bank will not accept the FC-GPR without it, and a below-floor issue is a contravention, not a reporting lapse
Board resolution + special resolution for private placement and preferential allotment; explanatory statement with the valuer's report; MGT-14 within 30 days	Board, members	ss. 42, 62(1)(c), 117; rule 14 PAS Rules	File the relevant resolution with the Registrar before issuing PAS-4 under rule 14(8)
PAS-4 private placement offer letter and record in PAS-5; separate bank account for application money	Company	s.42(3), (4), (6), (8); rule 14(3)–(5), (8)	For this cash subscription, receive funds from the subscriber’s bank account through a banking channel into the company’s separate account and may be used only after allotment and filing of the return of allotment (s.42(4))
AD bank confirmation that the remitter named in the term sheet is the entity whose KYC it holds, and that the purpose code is foreign direct investment	AD Category-I bank	Regulation 4 and the FIRMS KYC requirement	A remitter who differs from the subscriber named in the resolution is a return-of-filing or third-party-payment issue (Q14)

The CCPS terms themselves must satisfy section 55 (preference shares redeemable or convertible within twenty years) and the FEMA definition of equity instruments: fully and compulsorily convertible, with the conversion price or a formula fixed up front so that the conversion price is never lower than the fair value at the time of issue.

2. Can the FEMA pricing certificate show a lower value than my domestic round, and what will the AD bank query on the FC-GPR?

Answer: Yes, legally — the FEMA rule is a floor, not a fixed price. Rule 21 requires that shares issued to a person resident outside India are priced at not less than fair value; an investor may pay more. So a certificate showing fair value of ₹100 per share while the round is priced at ₹150 is in order. What the bank does query is the reverse: a round priced below the certified fair value, or a conversion formula that could produce a conversion price below the fair value at issue. Two practical cautions: the domestic round price is evidence of value in its own right (a recent arm's-length transaction is an accepted methodology), so a certificate far below it invites the question why; and if a domestic investor subscribed at ₹150 in the same round, the preferential-allotment resolution must carry one price for the class.

Examples of issues an AD bank may raise on a first FC-GPR: remitter name differs from the investor in the board resolution; the KYC on FIRMS is for a different entity than the FIRC; the pricing certificate is dated after the allotment; the CCPS conversion formula is not stated in the certificate; the PAS-3 share count or premium does not match the FC-GPR; the FIRC purpose code is not FDI; the declaration on downstream investment or Press Note 3 is missing. Ask the AD bank whether the form can be amended and resubmitted, or requires a different corrective step.

3. Issuing CCPS to investors: do we need a Registered Valuer report, a merchant-banker DCF, or both — and what does each get rejected for?

Answer: For a CCPS issue to identified investors you need the Registered Valuer report (Companies Act) and, if any investor is a non-resident, a FEMA pricing certificate, which a Chartered Accountant may sign. A merchant banker is not required by either law for an equity or CCPS issue. The merchant-banker requirement belonged to rule 11UA(2) (DCF for section 56(2)(viib) angel tax), and section 56(2)(viib) does not apply from assessment year 2025-26 (shares issued in previous year 2024-25 onwards).

• Registered Valuer report — required by rule 13 of the Companies (Share Capital and Debentures) Rules for every preferential allotment by a company other than a listed company. It is rejected, or questioned at the ROC or later by an investor's counsel, when it post-dates the board resolution, when it values equity but is silent on the CCPS conversion terms, or when it is signed by a valuer not registered for the asset class "securities or financial assets".
• FEMA pricing certificate — required by rule 21 of the NDI Rules for a non-resident subscriber. The AD bank returns it when the methodology is not stated, when it is not addressed to the company, or when the conversion formula of the CCPS is missing.
• Both in one document — in our practice the two are issued as one report where the valuer is also the certifying CA: one valuation date, one methodology, the Companies Act floor and the FEMA floor stated separately, and the CCPS conversion mechanics tested against both. That removes the commonest investor-counsel objection, which is two reports with two different numbers.

4. Can a pre-revenue method such as Berkus or scorecard be used for FEMA pricing, or does the issue price need DCF or NAV?

Answer: Rule 21 says "any internationally accepted pricing methodology for valuation on an arm's length basis, duly certified". It does not name methods. Berkus, scorecard, risk-factor summation and the venture-capital method are recognised early-stage methods and may support a pre-revenue price, but a certificate that rests on them alone is weaker than one that triangulates: a recent arm's-length transaction (the round itself, or the last round), a DCF on management projections with the risk expressed in the discount rate, and the early-stage method as a cross-check. Net asset value is almost never the right primary method for a pre-revenue technology company — it understates the business and, if used as the FEMA floor, exposes the company to the question why the investor paid five times it. Our reports use the DCF as the anchor and show the scorecard or first-Chicago result as corroboration, with the method weights stated.

5. Our investor wants a signed valuation next week, but we have no revenue and only management forecasts. What evidence will the valuer need?

Answer: A valuer can sign on forecasts; what the valuer cannot sign on is forecasts with nothing behind them. The data request for a pre-revenue round is short:

1. Cap table before and after the round, including the ESOP pool and any SAFEs or notes that convert.
2. The signed term sheet — price, number of CCPS, conversion ratio and any ratchet or anti-dilution term.
3. Five-year projections with the assumptions written out: pricing, customer count or users, churn, gross margin, headcount, burn. The valuer will test them, so the sheet behind them matters more than the summary.
4. Evidence behind the first two years: pipeline, pilots, letters of intent, signed contracts, app-store or usage data.
5. Bank statements and the latest trial balance; incorporation documents; any prior valuation.
6. Comparable transactions you are aware of in your segment.

Reviewer questions that come back on nearly every pre-revenue file: why the discount rate is where it is (we document it from a build-up — risk-free rate, equity premium, size and stage premia — and run a Monte Carlo on the key drivers so the sensitivity is shown, not asserted); why year-3 revenue is credible; what happens to the value if the round does not close. If you cannot answer the first two, the report should not be signed yet.

6. The investor's counsel changed the CCPS conversion formula after the valuation was signed. Which reports, approvals and documents need to be reviewed again?

Answer: All of them, because the conversion formula is part of the price. Check in this order: (a) the FEMA pricing certificate — it must state the formula and confirm that the conversion price cannot fall below fair value at issue; a changed formula needs a reissued certificate; (b) the Registered Valuer report, if it relied on the conversion terms to value the CCPS; (c) the special resolution and explanatory statement — rule 13 requires the terms of the issue, including conversion, to be stated, so a changed formula means a fresh resolution and MGT-14; (d) the PAS-4 offer letter, which must match the resolution; (e) the shareholders' agreement and the articles. If money has already been received under the old terms, do not allot on the new terms without the new resolution — allot within the 60 days or refund within the following 15.

7. Our closing slipped and the valuation certificate is approaching its validity limit. Which date matters, and what might need to be refreshed?

Answer: Two different dates for two different laws. For the Companies Act preferential allotment, rule 13 requires the allotment to be completed within twelve months of the special resolution; the report supporting the resolution should be available before the members vote. For FEMA, the Master Direction requires the pricing certificate to be not more than ninety days old on the date of the investment. Confirm the applicable investment date for the proposed closing and obtain a fresh certificate if the existing one will be older than ninety days on that date; if it will happen more than twelve months after the special resolution, pass a new resolution. A refreshed certificate is a re-examination of whether the price still meets the floor — if nothing material has changed, it is a short exercise, but it must be dated.

8. Two investors are wiring on different dates. One allotment or separate closings, and how does that affect filing work and fees?

Answer: One allotment is cleaner and cheaper, provided both wires arrive within the window. The 60-day allotment clock runs from each receipt separately, so if the second wire lands more than 60 days after the first, the first investor's money must be allotted (or refunded) before the second can be — that forces two closings. Each closing means its own PAS-3, its own FC-GPR for each non-resident subscriber (one FC-GPR per allotment per investor), and its own 30-day reporting deadline. The pricing certificate can cover both if both fall within its ninety days and the price is the same. Plan the wire dates with the 60-day limit in view, and tell the slower investor that its delay creates a second filing cycle at its cost.

9. The bank has credited the funds, but remitter KYC is pending. What can our team prepare now, and which deadlines are already running?

Answer: The 60-day allotment clock started on the date of credit, whether or not KYC is complete, and the 15-day refund clock sits behind it. Prepare now: the FIRC request to the bank (it is issued after KYC clears), the entity-master and business-user registration on FIRMS if not already done, the PAS-4 and PAS-5 record, the draft FC-GPR with the pricing certificate, the declaration on Press Note 3 and downstream investment, and the board minutes for the allotment. Chase the KYC in writing with the bank and the investor every few days — the bank will not issue the FIRC without it, and the FIRC is an FC-GPR attachment. If day 50 arrives without KYC, decide between allotting on the strength of the credit advice and the investor's own KYC pack (most banks accept this) and a refund.

10. FX conversion or bank charges left us short of the rupee subscription amount. Can we proceed with the planned allotment?

Answer: Allot only the number of CCPS the rupees received actually pay for at the agreed price; do not allot the full number against a shortfall. Shares issued without full consideration are a Companies Act problem (section 42 and the prohibition on issuing shares at a discount in section 53), and an FC-GPR showing consideration that does not match the FIRC is returned. The usual fix is a top-up remittance for the shortfall before allotment (the 60 days run from the first receipt, so move quickly), or a documented reduction in the number of instruments with the investor's written consent. Bank charges deducted abroad are the investor's cost unless the term sheet says otherwise.

11. PAS-3 is filed, but the AD bank says the FC-GPR share count or premium differs. Which records should we reconcile before making a correction?

Answer: Reconcile four documents against each other before touching either filing: the allotment board minutes (number, face value, premium), PAS-3 (what the ROC has), the FIRC (rupees received and date), and the pricing certificate (price per instrument). The difference is usually one of three things: PAS-3 reported face value only while FC-GPR reported face plus premium; a rounding difference between the rupee credit and the price multiplied by the number of instruments; or an ESOP-pool or SAFE conversion included in one filing and not the other. Correct the filing that is wrong, not the one the bank is looking at: for an incorrect PAS-3, confirm the correction process with the company secretary and the Registrar before filing anything further; a wrong FC-GPR is resubmitted on FIRMS after the bank returns it. Keep a one-page reconciliation on file — investor counsel asks for it at the next round.

12. FIRMS says "invalid file type" for our FC-GPR KYC PDF. What should we check first, and when should we escalate to the AD bank?

Answer: Check, in order: the file is a PDF (not a PDF inside a zip, not an image renamed .pdf), it is within the portal's size limit, the file name has no special characters, and it is not password-protected or digitally signed with a certificate the portal cannot read — ask the issuing bank for an accepted copy if the PDF carries a digital signature. Then clear the browser cache and retry on the browser the portal supports. If it still fails, ask the AD bank that received the remittance for a fresh copy of its KYC report on the non-resident investor as a plain PDF — the KYC report is the bank's document, which the company attaches — and escalate to the bank's FEMA desk the same day with the form reference and a screenshot of the error. (This checking order is illustrative; portal behaviour changes, and the bank's FEMA desk is the authority on what it will accept.) The 30-day FC-GPR deadline does not pause for a portal error, but a dated escalation record is what you will need if the Late Submission Fee is later contested.

13. FC-GPR filed eight months late: do we pay the Late Submission Fee or compound, and what does each cost in rupees and weeks?

Answer: If the shares were allotted within 60 days of receipt, at or above fair value, on the automatic route, and the only breach is the eight-month reporting delay, it is a Late Submission Fee (LSF) case. The AD bank computes the LSF under the RBI's matrix (A.P. (DIR Series) Circular No. 16 of 30 September 2022) from the amount involved and the period of delay, and the LSF route is available for reporting delays of up to three years from the due date. Compounding under section 15 of FEMA and the Foreign Exchange (Compounding Proceedings) Rules, 2024 is for delays beyond that and for substantive contraventions — allotment after 60 days without refund, issue below fair value, a government-route sector without approval, or an investor covered by Press Note 3. Compounding costs the ₹10,000 application fee plus GST and the compounding amount under the RBI's matrix, and the RBI may require a corrective step first — a post-facto approval, a refund or an unwinding — before it will compound. Neither amount is quoted here as a figure because both depend on the amount involved and the period of delay: the AD bank gives the LSF, and the RBI's compounding matrix gives the compounding amount.

14. The investor's fund administrator will remit the money, but the fund is the subscriber. What must we confirm with the bank before authorising the wire?

Answer: For this cash private placement, Rule 14(5) requires the subscription payment to come from the subscriber’s bank account. If the administrator operates the fund’s own account, ask the AD bank to confirm how it will identify the remitter and what it needs to verify signing authority, KYC and the wire. If the administrator proposes to pay from its own account, pause and route the cash subscription from the fund’s account. Ensure PAS-4 and the allotment resolution name the subscriber. For a mismatch discovered after receipt, have counsel and the AD bank assess the corrective steps before allotment. Illustrative bank query: The subscription agreement names the fund, but the wire instructions refer to its administrator. Whose bank account will send the funds, and who can authorise that payment?

15. What evidence shows the valuation was independent and not inflated, and can one report serve FEMA, income tax, Ind AS 102 and investor diligence?

Answer: Independence is shown by the engagement letter (addressed to the company, scope and purpose stated), the valuer's disclosure of interest, the data request and management representation letter, the dated inputs, and a report that explains each method and weight — the IBBI Valuation Standards require exactly this and an IBBI Registered Valuer's report is open to IBBI inspection. One report can serve several purposes only if it is written for them: the Companies Act floor, the FEMA floor and the Ind AS 102 fair value of the CCPS at the grant or issue date are three different questions and can be answered in one document with separate conclusions. Income-tax is the exception that needs care — section 56(2)(viib) does not apply from assessment year 2025-26 (shares issued in previous year 2024-25 onwards), so there is no company-level angel tax on current issues, and the investor's section 56(2)(x) exposure is tested against the rule 11UA net-asset FMV, which is a formula, not a valuation opinion; the report should state that NAV figure so the investor's adviser has it. Investor diligence will accept a Registered Valuer's report as a document, then test the projections independently.

When this guide does not apply

• Investor from a land-border country or with such beneficial ownership (Press Note 3 of 2020): government approval first; nothing here is on the automatic route.
• Convertible notes rather than CCPS: no allotment at issue; the FEMA report is Form CN, and the valuation question arises at conversion (see our convertible-note note in the valuation decisions guide).
• Transfer of existing shares to the foreign investor: FC-TRS within 60 days and the pricing rule runs the other way for a sale by a non-resident.
• LLPs: capital contribution is reported on LLP-I, and FDI in LLPs is limited to sectors with 100% automatic route and no performance conditions.
• Investor through an Indian AIF or an Indian-registered entity with foreign ownership: the downstream-investment rules apply, not direct FDI.

Next step: a pre-remittance review

Send us the instrument type, the investor's jurisdiction and structure, the proposed closing date and a redacted term sheet. We confirm the review scope, who signs what, the fee and the turnaround before any money moves. If the funds have already arrived, tell us the credit date first — the clocks above are already running and the review becomes a filing or remediation engagement.

Request a pre-remittance review

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Sources: FEM (Non-Debt Instruments) Rules, 2019 — rule 21 and Schedule I; FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 — regulation 4; RBI Master Direction on Foreign Investment in India (paras on pricing guidelines and reporting); A.P. (DIR Series) Circular No. 16 of 30 September 2022 (Late Submission Fee); Foreign Exchange (Compounding Proceedings) Rules, 2024; Companies Act, 2013 — sections 42, 53, 55, 62(1)(c), 117; Companies (Share Capital and Debentures) Rules, 2014 — rule 13; Companies (Prospectus and Allotment of Securities) Rules, 2014 — rule 14; Press Note 3 (2020 Series), DPIIT; Finance (No. 2) Act, 2024 (withdrawal of section 56(2)(viib)). See rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, RBI payment and reporting regulations and the RBI Foreign Investment Master Direction.