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Term sheet and SHA/SSA review

  • We read the term sheet and the investment agreements with you and explain, in plain numbers, what each clause costs you: dilution, liquidation preference, anti-dilution, vesting, board seats, vetoes and exits.
  • Deadline: Before signing the term sheet, and again before signing SSA and SHA and passing allotment resolutions
  • Done in Term sheet note in 3 working days; SSA and SHA comments in 5 to 7 working days per draft
  • Prepared by your Savvy, checked by a CA
  1. Term sheet draft
  2. Pre-money or post-money valuation
  3. Clause map of the term sheet
  4. Term sheet review note with red
The law and the stepsPay and start · QuotePer round, + 18% GST

Answer in brief

We read the term sheet and the investment agreements with you and explain, in plain numbers, what each clause costs you: dilution, liquidation preference, anti-dilution, vesting, board seats, vetoes and exits. We flag clauses that clash with the Companies Act or FEMA and coordinate with your lawyer on changes.

Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.

From the official sources

What the law says, and what trips people up

From the official portal's manuals and FAQs, with the source for each point.

The law

  • FEMA (Non-Debt Instruments) Rules 2019, instruments and assured returns

    Only fully and mandatorily convertible preference shares and debentures count as equity for foreign investment; optionally or partly convertible instruments are debt under the ECB rules; a non-resident cannot be given an assured exit priceSource

  • FEMA (Non-Debt Instruments) Rules 2019, Rule 21 (pricing)

    Issue to a non-resident at or above fair value; on transfers, resident to non-resident at or above fair value and non-resident to resident at or below fair value; deferred consideration up to 25% for up to 18 monthsSource

  • Companies (Share Capital and Debentures) Rules 2014, Rule 13

    For convertible securities the conversion price is fixed upfront on a valuation at offer, or later using a valuation not older than 60 days; issue needs a special resolution and a registered valuer's priceSource

  • Companies (Prospectus and Allotment of Securities) Rules 2014, Rule 14

    Offer letter (PAS-4) only to named persons after the resolution is filed; no right of renunciation; land-border country investors need government approvalSource

  • Companies Act 2013, Sec 42(6)

    If shares are not allotted within 60 days of receiving money, refund within the next 15 days, else 12% interest from the 60th day; closing timelines in the SSA must respect thisSource

  • FEMA 1999, penalty

    Contraventions can attract penalty up to three times the amount involved and continuing daily penalty; RBI may direct unwindingSource

  • Government fee

    None for the review. Stamp duty on the SSA, SHA and share issue is set by state law and is not covered here (see STU-POS-04).

On the portal

  1. No portal. Work on drafts shared by the investor and the company's lawyer
  2. Check company master data and existing charges or filings on mca.gov.in before reps and warranties are given
  3. Check DPIIT recognition status on startupindia.gov.in if any benefit or note depends on it

What trips people up

  • Instrument with optional conversion or buyback promised to a foreign investor

    Use fully and mandatorily convertible instruments; remove assured exit or fixed returnSource

  • Repayment or guaranteed return dressed up in a convertible instrument

    Keep the instrument equity-like; avoid guaranteed return languageSource

  • Optionality clauses that make the deal look like disguised debt

    Draft so the instrument reflects genuine equity intentSource

  • Money arrives before documents and resolutions are ready, and the 60-day clock runs out

    Set closing so allotment happens within 60 days or refund within 15 days to avoid 12% interestSource

  • Cap table in the agreements does not match statutory records

    Reconcile with registers and allotment returns before signing repsSource

People ask

Can we promise our foreign investor a buyback at a fixed price after 5 years?

No. FEMA does not allow an assured exit price for a non-resident.Source

Should the investor get CCPS or equity shares?

Either can count as foreign equity if the preference shares are fully and mandatorily convertible; optionally convertible ones are treated as debt.Source

Does the conversion price have to be fixed now?

The price or formula is fixed upfront, or later using a valuation not older than 60 days; for foreign investors it cannot be below fair value at issue.Source

What if closing slips after the investor has paid?

Allot within 60 days of receipt or refund within 15 days after that, else pay 12% interest.Source

What should a CN agreement cover?

Investment amount, valuation cap, interest, conversion timing and qualified round, redemption, termination and confidentiality.Source

IDFD

How we solve it: 4 steps

Every line tracked live.

Step 1 of 4 · What we need from you

Tap each one you already have

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  • Term sheet draft
  • SSA and SHA drafts
  • Current fully diluted cap table
  • Existing AoA and earlier investor agreements
  • Valuation report
  • Investor residency and nationality
  • Outstanding notes, CCDs or SAFEsOptional

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+ 18% GST

Per round. Delivered in Term sheet note in 3 working days; SSA and SHA comments in 5 to 7 working days per draft. Due: Before signing the term sheet, and again before signing SSA and SHA and passing allotment resolutions

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