What startups need to do after getting funding: MCA filings & board approvals (Part 1)

After securing seed funding, startups face critical compliance requirements. This first compliance guide walks lawyers through essential board approvals, shareholder resolutions, and MCA filings that transform agreements into legally recognised ownership.

Introduction

“Great! The SHA is signed, and the money’s in our account. We are done with all the legal stuff now, right?” Rahul’s question hung in the air, filled with the relief of a founder who believed the paperwork marathon was finally over.

I could not help but smile. After three intense months of preparation, term sheet negotiation, and SHA drafting, FoodSwift had indeed closed its ₹1 crore seed round with Altitude Ventures. 

The champagne bottles from yesterday’s celebration were still in the recycling bin. But what Rahul and Priya did not realise was that we were about to enter the most technically demanding phase of the entire fundraising process.

“Actually, we are just getting to the part where most lawyers drop the ball,” I explained, pulling out my post-funding checklist. “Signing the SHA is like getting engaged. Now we need to actually get married—and that means government filings, share certificates, and regulatory compliance.“

Priya’s excitement visibly dimmed. “More paperwork? But the investors have already wired the money!“

“That is exactly why this next phase is so critical,” I replied. 

“Right now, that money is basically sitting in your account without proper legal recognition. Until we file the right forms with the MCA, Altitude Ventures does not officially own those shares they have paid for.“

This is the reality that many startup lawyers—especially those new to the field—fail to communicate to their clients. The post-funding compliance phase is not some administrative afterthought. It’s the process that transforms agreements into legally recognised ownership and regulatory compliance.

In our previous articles, we walked through preparing FoodSwift for investment, negotiating their term sheet, and drafting a comprehensive shareholders’ agreement. Now, I will guide you through what happens after the signatures dry and the capital lands in your client’s bank account.

The first part of our post-funding compliance guide covers the critical domestic requirements:

• Board resolutions that activate the SHA
• Shareholder approvals required under the Companies Act
• PAS-3 filings with the Ministry of Corporate Affairs
• Issuing proper share certificates

In the second part, we will tackle the additional layer of compliance required for FoodSwift’s foreign investment from Altitude Singapore Holdings—the Foreign Exchange Management Act (FEMA) compliance. 

This includes FC-GPR filings with the Reserve Bank of India, FIRC documentation, and ongoing annual reporting obligations that are essential when receiving investments from overseas entities.

For FoodSwift, the stakes were high. 

Without completing these steps properly, their ₹1 crore investment would exist in a legal gray zone, potentially creating problems that could haunt them in future funding rounds.

I explained to a now-attentive Rahul and Priya, “Without these filings, your investor technically does not own those shares yet, despite having paid for them. More importantly, you could face penalties from regulatory authorities.“

The realisation dawned on Rahul’s face. “So we are not actually done with the legal work.“

“Not even close,” I replied. “But do not worry—I have got a system for this.“

And that is exactly what I am going to share with you. 

A systematic approach to post-funding compliance that will distinguish you from the many lawyers who focus solely on getting the deal signed while neglecting what comes after. Master this phase, and you will transform from a document drafter to a true strategic advisor—the kind that grows alongside their startup clients.

Let us begin with the first critical step: a board meeting to pass board resolutions that put your carefully crafted SHA into action.

Your first post-funding Board Meeting

“We have never actually held a formal board meeting before,” Priya admitted sheepishly as we prepared for FoodSwift’s first post-funding board session. 

“We have been making decisions over coffee. Is this going to be… awkward?“

It is a common confession among seed-stage startups. Before investment, founder-only boards often operate informally. But once investors join the picture, proper governance becomes essential. 

That first post-funding board meeting is not just a formality. It is where the written provisions of your SHA begin their practical life.

For FoodSwift, this transition was particularly important. 

Their SHA granted Altitude Ventures one board seat, transforming their two-person founder board into a three-director governance structure. Vikram, the investment director from Altitude Singapore, would be joining them for the first time as a formal board member.

“Let us start by preparing a proper board meeting notice,” I explained, pulling out my laptop. “Under Section 173 of the Companies Act, we need to give at least seven days’ notice for a board meeting, unless your Articles allow for shorter notice.“

I drafted a formal notice, which you can access here:

1. Company name and registered office address
2. Meeting date, time, and venue (or video conferencing details)
3. Clear agenda items listing all post-funding approvals needed
4. Instructions for participation via video conferencing
5. Notification that the investor director would be attending

“This level of formality feels strange,” Rahul commented as I showed him the draft.

“It is not just formality—it is protection,” I replied. “Proper notice ensures all decisions made are legally binding. Remember, your investor is now entitled to participate in these decisions.“

Next, we prepared a comprehensive agenda (click here to see) that sequenced the critical post-funding items:

Agenda For Board Meeting

1. To take note of previous board minutes
2. To appoint Vikram Mehta as a nominee director of Altitude Ventures
3. To approve the allotment of 10,004 equity shares to Altitude Ventures
4. To authorise the filing of Form PAS-3 with the Registrar of Companies
5. To approve the updated capitalisation table post-investment
6. To approve the convening of the Extraordinary General Meeting
7. To update bank account signatories
8. Any other business with the permission of the Chair

“For each agenda item, we will need draft resolutions ready,” I explained, which are attached along with the agenda item. “These resolutions are what transform your SHA provisions into official company actions.“

We reviewed each draft resolution carefully, ensuring they referenced the appropriate sections of the Companies Act and contained all necessary details—exact share counts, precise investment amounts, and specific individuals authorised to execute each action.

“Now, let us talk about how the actual meeting will run,” I continued. 

“As chairperson, Rahul, you will need to confirm quorum, introduce each agenda item, open discussion, call for votes, and ensure proper recording of decisions.“

We conducted a brief mock session, practicing the formal procedures for opening the meeting, confirming attendance through video conferencing, and proper voting documentation.

“What about minutes? Do we need to record everything said?” Priya asked.

“Not verbatim,” I clarified. “But under Section 118, you do need to document key discussions, all decisions, and any dissenting views. I have prepared a minutes template that follows proper statutory format.“

On the day of the board meeting, I observed as Rahul competently guided the proceedings through each agenda item. Vikram, the new investor director, appeared impressed by the level of preparation. The formal appointment of Vikram as a director was recorded first, allowing him to properly participate in subsequent resolutions.

After the meeting concluded, I helped prepare the final minutes document (click here to see), ensuring it captured all resolutions accurately and obtained digital signatures from all directors.

“There is one more critical step,” I noted. “Since we have approved calling an EGM, we need to prepare the EGM notice with a detailed explanatory statement for each special resolution.“

I drafted a comprehensive EGM notice (click here to see) that included:

1. Date, time, and location of the meeting
2. Special business items clearly marked
3. Text of each proposed special resolution
4. Detailed explanatory statements as required under Section 102
5. Notes regarding voting rights and proxy appointments

“The explanatory statement is particularly important,” I emphasised. “It must disclose all material facts about each special resolution, including any director or KMP interests in the proposed matters.“

For the share allotment resolution, the explanatory statement detailed the investment terms, valuation basis, and resulting ownership changes. For the Articles amendment resolution, it summarised the key SHA provisions being incorporated.

“Now I understand why proper legal guidance is essential during this phase,” Rahul remarked. “There are so many technical requirements we would have missed on our own.“

The essential post-funding resolutions

Your client’s first post-funding board meeting should address several critical resolutions:

1. Formal share allotment approval – Officially approving the issuance of shares in exchange for the investment amount
2. Authorisation for regulatory filings – Empowering specific individuals to file PAS-3 with the MCA
3. Appointment of investor director(s) – Formally adding the investor representative to the board
4. Approval of updated capitalisation table – Confirming the post-investment ownership structure
5. Bank account signatory updates – Often required by banks after significant ownership changes

Strategic considerations for board resolutions

When drafting these critical first post-funding resolutions, keep these strategic points in mind:

1. Align with legal requirements – Ensure resolutions reference appropriate sections of the Companies Act.
2. Be specific about numbers – Include exact share counts, prices, and total amounts.
3. Create clear authority chains – Specify who is authorised to take which actions.
4. Reference the SHA – While maintaining confidentiality, tie resolutions to the SHA framework.
5. Build in flexibility – Authorise minor corrections without requiring additional board approval.

The logistics: Practical tips for first-time boards

For startups holding their first formal board meeting, here are practical suggestions I shared with FoodSwift:

• Schedule the meeting 7-10 days after funds are received, allowing time for preparation
• Circulate an agenda and resolution drafts 48 hours in advance
• Use video conferencing (permitted under the Companies Act) for convenience
• Record attendance and voting specifically in the minutes
• Have all directors sign the final minutes either physically or digitally

“Do we really need physical signatures on these resolutions?” Priya asked during our preparation session.

This question reflects a common misunderstanding about board documentation. 

While the Companies Act allows for electronic board meetings, the resolutions themselves still require proper documentation. 

For critical resolutions like share allotment, I recommend collecting physical signatures when possible or secure digital signatures that comply with the Information Technology Act.

The board meeting is where the investor and founders work together in a governance capacity. Make it substantive, professional, but not unnecessarily formal. 

For FoodSwift, that first meeting laid the foundation for a productive board relationship that combined proper governance with practical business discussion.

Once the board resolutions are in place, the next step is securing the necessary shareholder approvals, which often introduces founders to the world of Extraordinary General Meetings.

Shareholder approvals: Do not skip the EGM

“Another meeting? Can the board not just handle everything?” Rahul asked, visibly frustrated that we needed yet another formal gathering after the board meeting.

Many founders share this sentiment. 

Board meetings seem logical, but shareholder meetings—especially when the founders are the majority shareholders—can feel redundant. This is where many young startup lawyers fail their clients by either skipping this critical step or inadequately explaining its importance.

“I understand it feels bureaucratic,” I told him, “but under Sections 42 and 62 of the Companies Act, certain decisions legally require shareholder approval, not just board approval. Issuing new shares to investors is one of them.“

This was FoodSwift’s introduction to the Extraordinary General Meeting (EGM)—a formal shareholder meeting outside the annual rhythm of company governance. For seed-stage startups, the post-funding EGM is often their first experience with this corporate formality.

Why shareholder approval matters (even when founders own most shares)

The Companies Act creates a two-tier approval system for many significant corporate actions. This is not arbitrary bureaucracy—it is designed to protect minority shareholders by distinguishing between board authority and shareholder rights.

For post-funding compliance, three crucial areas typically require shareholder approval:

1. Issuing new equity shares – Under Section 62(1)(c), private placements to any person require a special resolution.
2. Amending the Articles of Association – Any changes to incorporate SHA provisions need shareholder approval under Section 14 of the Companies Act.

For FoodSwift, our post-funding EGM needed to address all three of these areas. The SHA with Altitude Ventures required several amendments to the Articles of Association, including special rights for the investor director and reserved matters.

Priya looked sceptical. “But Rahul and I still own 86.96% of the company—we will obviously approve these resolutions since we already signed the SHA. Is this not just paperwork?“

“It’s essential paperwork,” I emphasized. “Without proper shareholder resolutions, the RoC could reject your PAS-3 filing, leaving your investor without legal ownership of their shares, despite having paid ₹1 crore for them.“

That explanation resonated. 

Sometimes clients need to understand not just the “what” but the “why” behind compliance requirements.

The special resolution requirement: a higher threshold

One critical aspect of post-funding shareholder approval is that it often requires “special resolutions” rather than ordinary ones. Under Section 114 of the Companies Act:

• Ordinary Resolution: Requires a simple majority (>50%)
• Special Resolution: Requires 75% majority

For preference share issuances or amendments to the Articles of Association, special resolutions are mandatory. This means documenting that shareholders representing at least 75% of the voting rights approved the action.

For FoodSwift, this was not a practical concern since Rahul and Priya together held more than 75%. But it’s crucial to use the correct resolution type regardless—a mistake here could invalidate the entire process.

Calling and conducting the EGM

After the board meeting, I prepared the EGM notice that had been approved during our board session. 

“When sending out this notice,” I explained to Rahul and Priya, “we need to ensure we comply with all the statutory requirements under Sections 101 and 102 of the Companies Act.“

The notice included the date, time, and venue for the meeting, along with the special business items requiring shareholder approval. Most importantly, it contained a detailed explanatory statement for each special resolution, as required under Section 102 of the Act.

“Why do we need this explanatory statement?” Rahul asked, reviewing the lengthy document.

“It is a legal requirement that provides shareholders with all material facts necessary to make an informed decision,” I explained. “Even though you two are currently the only shareholders, this documentation creates a proper record for future reference and due diligence.“

We sent the notice to all shareholders—currently just Rahul and Priya—via email and registered post, maintaining proof of delivery. 

Given the nature of their startup, we also included a consent for a shorter notice form, which both founders promptly signed, allowing us to hold the EGM with just 7 days’ notice instead of the statutory 21 days.

“For the actual meeting, we need to maintain formal records similar to your board meeting,” I advised, providing them with templates for the attendance register and minutes.

On the day of the EGM, I arrived early to set up the meeting room. Though it felt somewhat ceremonial with only the two founders present, we followed proper protocol—Rahul, as the Chairman, called the meeting to order, confirmed quorum (which was easily met), and proceeded through each resolution.

For each special resolution, Rahul read out the proposed text, Priya formally proposed it, and both voted in favour. I carefully documented each vote in the minutes, specifically noting that the 75% threshold for special resolutions was met.

“Even with just the two of you, we need to create a proper record showing that these resolutions were correctly passed,” I emphasized as we completed the paperwork.

Practical EGM logistics for seed-stage startups

For early-stage companies like FoodSwift, executing the EGM does not need to be overly complex. I provided these practical guidelines:

1. Timing: Schedule the EGM immediately after the board meeting (even same day).
2. Notice Period: Provide at least 21 days’ notice, unless 95% of shareholders consent to shorter notice.
3. Short Consent: For seed-stage startups with few shareholders, use Section 101(1) to hold the EGM with shorter notice.
4. Documentation: Maintain attendance records, voting details, and signed minutes.
5. Filing Requirements: Upload the special resolutions to the MCA portal within 30 days using MGT-14.

“This is much more formal than I expected,” Rahul noted as we prepared for their EGM.

“Think of it as growing pains,” I explained. “As your company matures, these governance practices become increasingly important. Better to establish good habits now.“

For FoodSwift, we utilized the shorter notice provision since Rahul and Priya held more than 95% of voting rights and consented to a 7-day notice period. This allowed us to conclude both the board meeting and EGM within a week of receiving funds, keeping our compliance timeline on track.

With board and shareholder approvals secured, we were ready to move to the next critical step: filing the PAS-3 form with the Ministry of Corporate Affairs—the step that gives official recognition to your client’s new cap table.

Filing MGT-14 first: a crucial prerequisite

“Before we can file the PAS-3, we need to file another important form,” I explained to Rahul and Priya. “The special resolutions we just passed at the EGM must be registered with the Registrar of Companies within 30 days using Form MGT-14.“

I pulled up a copy of Form MGT-14 on my laptop. “This form essentially tells the RoC about significant decisions your shareholders have made. In our case, we are informing them about the approval for share allotment and Articles of Association amendments.“

“Is this another ticking clock we need to worry about?” Rahul asked, already concerned about the 15-day PAS-3 deadline.

“Yes, but we have more breathing room—30 days instead of 15,” I replied. “However, the PAS-3 filing often requires attaching the MGT-14 filing acknowledgement, so we need to file MGT-14 first.“

We prepared the MGT-14 filing that same day, attaching certified copies of the special resolutions and explanatory statements. Here is the instruction kit to fill MGT-14 form.

Given the critical importance of this prerequisite step, I personally verified that the digital signature process went smoothly, and we received our filing acknowledgment the next day. 

“Now that the special resolutions are officially on record with the RoC, we can proceed with the PAS-3 filing,” I explained, checking one more box on our compliance checklist.

Filing PAS-3: complying with the MCA

“What exactly is this PAS-3 form, and why is it so important?” Priya asked during our post-EGM compliance meeting. Her question reflected a common knowledge gap among first-time founders who have successfully raised capital.

I picked up a printout of the form and placed it on the table. “This is the official document that tells the government about your new shareholders. Until we file this, Altitude’s ₹1 crore investment exists in a legal grey area—they have paid for shares that are yet not officially recognised.”

Form PAS-3 (Return of Allotment) is perhaps the single most important post-funding filing. It is the bridge between private agreement and public recognition, transforming your SHA’s ownership provisions into legally registered equity. Yet it is frequently filed incorrectly or late by inexperienced startup lawyers, creating serious compliance issues down the road.

The 15-day countdown begins

The moment shares allotment for a private placement is done, a critical clock starts ticking. Section 42(8) of the Companies Act, 2013, read with Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, requires filing PAS-3 within 15 days of allotment—one of the strictest deadlines in corporate compliance for private placements. 

“Fifteen days is not much time,” Rahul observed.

“And missing it carries significant consequences,” I added. “Late filing penalties start at ₹1,000 per day and can quickly escalate. More importantly, repeated compliance failures create a troubled MCA record that can haunt your company during future fundraising due diligence.”

This timeline creates an immediate post allotment priority: preparing and filing an accurate PAS-3 without delay.

Essential PAS-3 attachments

A complete PAS-3 filing requires several supporting documents, each serving a specific verification purpose:

1. Board resolution approving the allotment (from your post-funding board meeting)
2. Shareholder resolution authorising the share issuance (from your EGM)
3. List of allottees with complete details (name, address, number of shares, consideration)
4. Valuation report from a registered valuer or chartered accountant
5. Amended Articles of Association if your SHA required any changes
6. Form MGT-14 filing receipt (for the special resolutions)

For FoodSwift, collecting these documents was straightforward since we had prepared thoroughly. However, one complication emerged when Rahul mentioned they had hired an intern to handle some administrative tasks:

“By the way, Aditya, our new intern, updated our company’s profile on the MCA portal yesterday. Is that relevant?“

That innocent question triggered immediate concern. “What exactly did he update?” I asked.

“Just basic company information—he said something about authorised capital needing to match before filing some forms,” Rahul replied.

This was a potential disaster in the making. Upon investigation, I discovered the intern had attempted to update FoodSwift’s authorised capital in preparation for PAS-3 filing, but had incorrectly entered the figure. This required immediate correction through a separate Form SH-7 filing before we could proceed with PAS-3.

Common PAS-3 filing errors

Through dozens of post-funding compliance processes, I have observed recurring PAS-3 issues that create preventable headaches:

1. Mismatched numbers: Discrepancies between the number of shares or amounts in resolutions versus the PAS-3 form
2. Unauthorised capital: Attempting to allot shares beyond the company’s authorised capital limit
3. Incorrect consideration details: Failing to properly document the investment as cash, other than cash, or both
4. Missing attachments: Omitting required supporting documents, especially MGT-14 filing receipts
5. Signature confusion: Using the wrong director’s digital signature or an improperly registered DSC

For FoodSwift, we narrowly avoided the unauthorised capital error thanks to catching the intern’s mistake. I helped them file Form SH-7 to increase their authorised capital before proceeding with PAS-3, adding a week to our timeline but preventing a rejection.

“These forms seem like they are designed to be confusing,” Priya complained as we worked through the details.

“They require precision,” I agreed. “But once you understand the logic behind them, they are manageable. And now that we have corrected the authorised capital issue and filed our MGT-14, we are back on track.“

The valuation report requirement

One element of PAS-3 that often catches founders by surprise is the need for a formal valuation report. This is particularly relevant for shares issued at a premium (above face value), which is typical in startup funding rounds.

For FoodSwift, their shares had a face value of ₹10 each but were being issued at ₹1,000 per share (₹990 premium). This significant premium requires justification through a valuation report prepared by a registered valuer or chartered accountant.

We engaged a CA familiar with startup valuations who used the Discounted Cash Flow (DCF) method to support FoodSwift’s valuation. This report:

1. Documented the methodology used (DCF)
2. Provided financial projections supporting the valuation
3. Referenced industry comparables
4. Concluded with a value per share calculation
5. Included the CA’s certification

“Do investors typically ask for this report?” Rahul inquired.

“Not usually,” I explained. “This is primarily for regulatory compliance. However, sophisticated investors like Altitude often do their own valuation analysis before investing, which should align with what our CA determines.“

The PAS-3 date strategy

Here is a practical tip that many young lawyers miss: the “date of allotment” on your PAS-3 is critically important for compliance timelines. While it typically matches your board resolution date, there can be strategic reasons to adjust it slightly.

For FoodSwift, we held their board meeting immediately after receiving funds, but deliberately dated the actual share allotment three days later in the resolution. This created a small buffer in our 15-day filing window to accommodate any unexpected delays in document collection or signature processes.

As long as the allotment date is after the funds are received and the resolution is passed, this approach is both legal and practical. Just ensure all documents consistently reference the same allotment date.

When the money arrives before approvals

In some cases, eager investors wire funds before formal approvals are complete. This creates a sequencing challenge since technically, shares should not be allotted until both board and shareholder approvals are in place.

If you face this situation, have your client:

1. Acknowledge receipt of funds through a formal letter.
2. Clarify that shares will be allotted upon completion of the required approvals.
3. Hold the funds in a separate account when possible until approvals are secured.
4. Document the sequence carefully in the board minutes.

With FoodSwift’s MGT-14 and PAS-3 successfully filed, we had established the legal foundation of Altitude’s ownership. 

Now we needed to complete the final step in our domestic compliance process: issuing official share certificates and updating the company’s statutory registers.

Issuing share certificates & updating registers

“Do we really need physical share certificates? Is that not old-fashioned?” Rahul asked as I explained the next steps in our post-funding process.

His question reflected a common disconnect between modern startup culture and traditional corporate law requirements. In an era of digital everything, the concept of physical share certificates can seem antiquated. Yet they remain a critical legal requirement under the Companies Act.

“Think of share certificates as the investor’s receipt,” I explained. “They are tangible proof of ownership. Without them, your SHA and cap table are just claims without formal documentation.“

Section 46 of the Companies Act mandates that every company issue certificates for all allotted shares within two months (60 days) of allotment. This obligation applies regardless of company size or stage, making it one of the final critical steps in post-funding compliance.

For FoodSwift, issuing these certificates would formalise Altitude Ventures’ ownership of its newly acquired 10,004 equity shares.

Physical vs. digital share certificates

“I recently came across an important update to the regulatory framework,” I told Rahul and Priya, pulling up the notification on my tablet. “In October 2023, the Ministry of Corporate Affairs introduced new rules regarding dematerialisation of securities.“

I showed them the relevant sections of the notification. “Under Rule 9B of the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023, private companies that are not small companies will be required to issue securities only in dematerialised form and facilitate dematerialisation of all existing securities.“

“Does this apply to us?” Priya asked.

“Not immediately,” I clarified. “The rule applies to private companies that do not qualify as ‘small companies’ as per their audited financial statements for the financial year ending on or after March 31, 2023. Such companies have 18 months from the closure of that financial year to comply.“

“What is a small company?” Rahul inquired.

“Under the Companies Act, a small company is one with paid-up capital not exceeding ₹2 crore and turnover not exceeding ₹20 crore. Currently, FoodSwift qualifies as a small company, so you are exempt from mandatory dematerialisation. However, it is something to keep in mind as you grow.“

“If and when you exceed the small company thresholds (₹2 crore paid-up capital or ₹20 crore turnover), you will have 18 months from the end of that financial year to complete the dematerialisation process.”

“For now, physical certificates remain appropriate for you, but we should prepare for eventual dematerialisation as part of your growth strategy.“

The requirements for valid share certificates include:

1. The company’s name, address, and CIN (Corporate Identity Number)
2. The certificate number and distinctive share numbers
3. The shareholder’s name, address, and number of shares
4. The class of shares and the amount paid per share
5. The company seal and authorised signatures
6. Proper stamps were required by state laws

“Is there a specific format we need to follow?” Priya asked.

“No, there is a prescribed format given under the Act,” I replied. 

Here is the share certificate format in form SH-1 as prescribed under the Companies Act

For FoodSwift, we needed to have the certificates properly stamped in accordance with Maharashtra stamp duty requirements, as the company was incorporated in Mumbai.

“Getting the stamp duty right is important,” I cautioned. “Each state has different requirements, and unstamped or improperly stamped certificates can create legal complications later.”

Although FoodSwift’s operations were primarily based in Bangalore, we had to comply with Maharashtra stamp duty laws since that is where the company was incorporated. 

We arranged for the certificates to be stamped in Maharashtra through an authorised franking agency. 

“This might seem like a geographical inconvenience,” I explained to Rahul and Priya, “but stamp duty compliance is state-specific. Using local franking facilities in Bangalore for Maharashtra stamp duty could render your certificates legally deficient during future due diligence.”

Planning for future dematerialisation

“While you are exempt from mandatory dematerialisation for now, it is wise to prepare for it,” I advised. “When FoodSwift grows beyond the small company threshold, you will need to work with depositories like NSDL or CDSL to convert physical shares into electronic form.“

“What would that process involve?” Rahul inquired.

“You would need to appoint a SEBI-registered Registrar and Transfer Agent (RTA), sign agreements with depositories, and have shareholders open demat accounts. The MCA notification gives eligible companies an 18-month window to complete this transition after crossing the threshold.“

“Does this affect our current process?” Priya asked.

“No, we will proceed with physical certificates as planned. But documenting everything meticulously now will make the eventual transition to dematerialised shares much smoother.“

Updating statutory registers

Share certificates are only one part of the equation. Equally important is updating the company’s statutory registers to reflect the new ownership structure. The Companies Act requires maintaining a Register of Members under Section 88.

“We do not have formal registers yet,” Priya admitted. “We have just been tracking everything in spreadsheets.“

This is common for early-stage startups, but post-funding is the perfect time to establish proper statutory records. For FoodSwift, I created physical registers that included all historical information and the new Altitude investment.

“For the Register of Members, we need to use Form MGT-1 as prescribed under Section 88(1)(a) of the Companies Act and Rule 3(1) of the Companies (Management and Administration) Rules, 2014,” I explained, showing them the official format.

“Do these registers need to be filed anywhere?” Rahul asked.

“No, but they must be maintained at your registered office and be available for inspection,” I explained. “During future due diligence, investors will want to see these registers to confirm a clean title to all shares.“

Do not forget investor acknowledgement

One final step that many lawyers overlook is obtaining formal acknowledgement of receipt from investors when delivering share certificates. This small detail can prevent future disputes about whether certificates were actually issued.

For Altitude Ventures, we prepared a simple acknowledgement receipt that Vikram signed when collecting their certificate:

ACKNOWLEDGMENT OF RECEIPT

I, Vikram Mehta, authorised representative of Altitude Ventures, hereby acknowledge receipt of Share Certificate No. 003 representing 10,004 equity shares (bearing distinctive numbers 56697 to 66700) of FoodSwift Private Limited.

Date: [Date]

Place: Bangalore

Signature: ___________________

Name: Vikram Mehta

Designation: Investment Director, Altitude Ventures

This acknowledgment, though not legally required, completed our documentation trail and provided evidence that FoodSwift had fulfilled all of its post-funding obligations.

With share certificates issued and registers updated, we had completed the core legal requirements of post-funding compliance for domestic regulatory purposes.

Your post-funding compliance checklist

As we concluded our work together, I left FoodSwift with a streamlined checklist that covered all the essential domestic compliance steps we had completed:

1. Post-funding compliance calendar

This simple calendar tracked all post-funding deadlines, including:

• Board and shareholder approval timing (7-10 days post-funding)
• PAS-3 filing deadline (15 days from allotment)
• MGT-14 filing deadline (before PAS-3 is filed)
• Share certificate issuance deadline (60 days from allotment)

2. Document checklist

This comprehensive list included all documents needed for post-funding compliance, with checkboxes to track completion:

• Board meeting notice and agenda
• Board resolution for share allotment
• EGM notice
• Special resolution for share issuance
• Special resolution for AOA amendment
• Valuation report
• MGT-14 
• PAS-3 form and attachments
• Share certificate 
• Updated register of members
• Investor acknowledgement receipt

3. Cap table version control

The final component tracked changes to FoodSwift’s cap table after each transaction:

Version	Date	Event	Pre-Money Valuation	Investment	New Shareholders	Notes
1.0	Jan 2023	Incorporation	–	₹1,00,000	Rahul, Priya	Initial capital
2.0	May 2023	Seed Round	₹6.67 crore	₹1 crore	Altitude Ventures	13.04% equity

“This might seem like overkill now,” I explained to Rahul and Priya, “but it will save you countless hours when you raise your Series A. Plus, having this level of organisation sends a strong signal to future investors about your company’s governance.“

For small startups like FoodSwift, compliance tracking does not need sophisticated software—a well-structured spreadsheet is often sufficient. As they grow, they can migrate to more comprehensive governance platforms.

“Who is going to maintain this?” Priya asked practically.

“Ideally, your company secretary or CFO should own this,” I advised. “But at your stage, designate someone on the founding team to be the compliance point person. Maybe rotate it quarterly so everyone develops an understanding of these requirements.“

Conclusion: domestic compliance complete, but foreign investment requirements ahead

With share certificates issued and registers updated, we had completed the core legal requirements of post-funding compliance for domestic regulatory purposes. FoodSwift could now demonstrate that their capitalisation table was properly reflected in their corporate documentation and MCA filings.

However, our compliance journey was not yet complete, because Altitude Ventures had invested through their Singapore entity—Altitude Singapore Holdings—an entirely new regulatory framework came into play: the Foreign Exchange Management Act (FEMA).

“We have taken care of telling the MCA who owns your shares,” I explained to Rahul and Priya. “But now we need to tell the Reserve Bank of India where that money came from.“

This second layer of compliance would involve:

• Filing the Foreign Collaboration-General Permission Route (FC-GPR) form
• Obtaining a Foreign Inward Remittance Certificate (FIRC)
• Coordinating with their Authorised Dealer bank
• Meeting strict 30-day reporting deadlines
• Ensuring ongoing annual compliance with RBI requirements

Had FoodSwift received investment only from domestic Indian investors, our compliance work would be finished. But in today’s globalised startup ecosystem, foreign investment is increasingly common, and brings with it additional regulatory requirements that are equally important to get right.

In our next article, we will explore the FEMA compliance process in detail, guiding you through the steps needed to properly document and report foreign investments in your startup clients.