Streamlined PREFERENCE SHARES ISSUANCE · Startup & Investment

Streamlined PREFERENCE SHARES ISSUANCE · Startup & Investment

  • 💬 TAGLINE

Custom packages available starting from

₹1,999/-

Get Consultation Quote

Here's How It Works

Step 1

Consultation Requirement

Our team reaches out to understand your precise requirements.

Step 2

Drafting Review

We prepare all necessary paperwork specific to your legal needs.

Step 3

Filing

Filing and rigorous follow-up with the respective authorities.

What Our Clients Say

“Lawxygen provides top-tier support. Registration timelines were strictly followed with full transparency.”

Rahul Verma

Rahul Verma

Director, TechNexus

Here's What You'll Need

💬 TAGLINE

  • Document Name
  • Notes / Format
  • Document Name
  • Notes / Format
  • Certificate of Incorporation and MoA/AoA
  • Confirms authorised capital and existing AoA provisions - for AoA amendment drafting · PDF
  • Current Cap Table
  • All existing shareholders and outstanding convertible instruments - to plan the CCPS issuance
  • Investor Term Sheet
  • Term sheet specifying CCPS terms - liquidation preference, dividend, anti-dilution, conversion, voting rights · PDF
  • Valuation Report
  • SEBI-registered professional valuation for FEMA pricing compliance on foreign investment · PDF

Why Should I Use Lawxygen for Registering a Private Company Online in India?

Expert Lawyers

Services by certified professionals

Affordable

Pricing that respects founders

Fast Tracking

Efficient application clearance

Ready to start your business with limited liability? Lawxygen makes it simple and affordable.

!

Did you know?

Formal registrations protect your personal assets and increase brand perception exponentially.

Our automated compliance dashboards keep you updated proactively so you never miss a deadline.

Overview - preference shares issuance startup investment Registration

What is it?

Preference shares are a class of share with preferential rights over equity shareholders - typically in respect of dividend payments and return of capital on liquidation or winding up. In Indian startup investments, Compulsorily Convertible Preference Shares (CCPS) are the dominant VC investment instrument - treated as FDI equity under FEMA and providing investors with the economic protections they require.

CCPS structure and rights

Liquidation Preference: CCPS holders receive priority return (1x or 2x their investment) before equity shareholders participate in exit proceeds. Anti-dilution: Adjusts conversion ratio in down-rounds (typically weighted-average basis). Preferred Dividend: Non-cumulative preferred dividend before any equity dividend. Conversion: Mandatorily converts to equity at IPO or specified liquidity event. Voting: Typically votes on CCPS-specific matters + contractual consent rights (reserved matters) under the SHA.

CCPS vs. equity shares for investor structuring

Equity: Simple, clean, direct ownership - appropriate for angel investors in very early rounds who don't require structured downside protection. CCPS: Complex but investor-protective - standard for all institutional VC investments Series A onwards. The choice between equity and CCPS depends on the investor's requirements and the company's negotiating position.

Companies Act compliance for CCPS

Same Section 42 private placement procedure as equity. AoA must be amended to create the CCPS class with specified rights. CCPS must convert or be redeemed within 20 years (Companies Act). Preference shareholder rights registered with ROC through AoA amendment filing.

Benefits - Benefits of Company Registration Online Using Lawxygen

Who Usually Requires This?

The PREFERENCE SHARES ISSUANCE · Startup & Investment solution matches perfectly with these profiles:

  • Profile
  • Why It Applies
  • Profile
  • Why It Applies
  • Startups receiving institutional VC or PE investment
  • All institutional VC investments use CCPS - the standard global VC instrument for India. Lawxygen structures and documents CCPS issuances for seed, Series A, and later-stage VC rounds.
  • Companies structuring investor returns around liquidation preference
  • When investors require a minimum return protection (1x non-participating or 2x participating), CCPS provides the preferred economic rights structure - protecting investor downside while keeping equity upside uncapped.
  • Companies accepting foreign VC investment
  • CCPS is one of the three FEMA-approved equity instruments (equity shares, CCDs, CCPS) for FDI in Indian companies - making it the standard vehicle for foreign VC investment in India.
  • Companies doing CCPS-to-equity conversion pre-IPO
  • Before IPO, all outstanding CCPS must typically convert to equity shares - creating a clean equity structure. We manage the conversion process and associated ROC, SEBI, and RBI filings.
  • Promoters and directors negotiating with PE investors
  • PE investors typically invest through CCPS - with governance rights negotiated in the SHA alongside the economic rights embedded in the CCPS. We represent promoters in negotiating CCPS terms that protect founder interests.
  • ✅ WHY DO YOU NEED THIS
  • Key Benefit
  • Explanation
  • Key Benefit
  • Explanation
  • Liquidation Preference Is Non-Negotiable for Most Institutional VCs
  • Institutional VCs require a minimum 1x liquidation preference - ensuring they recover their investment before equity shareholders participate in exit. Without CCPS, this protection is structurally unavailable.
  • Anti-Dilution Protects Investors in Down-Rounds
  • CCPS anti-dilution provisions adjust the conversion ratio if shares are issued at a lower price - protecting investor ownership from being unfairly diluted in a down-round.
  • FEMA-Compliant - Treated as FDI Equity
  • CCPS is explicitly recognised as an FDI equity instrument under FEMA - allowing foreign VC investment without ECB restrictions that apply to foreign debt instruments.
  • AoA Amendment Creates a Permanent Legal Record of Investor Rights
  • The AoA amendment creating the CCPS class records all investor rights in the company's constitutional documents - providing a permanent, publicly searchable legal record of the company's capital structure.
  • PROCESS
  • Step Name
  • What Happens
  • Timeline
  • Step 1
  • CCPS Terms Structuring
  • We structure the CCPS terms - dividend rate, liquidation preference, anti-dilution mechanism, conversion trigger and ratio, voting rights, and FEMA compliance - ensuring Companies Act conformity.
  • Days 1–3
  • Step 2
  • AoA Amendment Drafting
  • We draft the AoA amendment creating the CCPS class and prepare the special resolution for shareholder approval.
  • Days 2–7
  • Step 3
  • Issuance Documentation
  • Shareholder Resolutions.
  • Days 5–14
  • Step 4
  • ROC and RBI Filings
  • Form PAS-3 with ROC within 30 days. Form FC-GPR with RBI within 30 days (for foreign investors). Amended AoA filed with ROC.
  • Days 14–44

How It Works

Execution is straightforward. Hand over the details and relax.

Consultation Request

Drop your inquiry.

Data Preparation

Our agents format the forms via robust checks.

Execution

Final approvals fetched from the regulating authorities.

Expected Additional Levies

  • Filing Fees to Government
  • E-Stamp Duties according to state norms
  • Processing Levies based on capital limits

Core Advantages to Remember

Avoid Penalties

Better Market Position

Standardized Documentation

FAQ's