The money is wired, the SHA is signed – and the round can still go wrong. Indian company law wraps a private placement in a sequence of statutory clocks: allot within 60 days or refund at 12%, file PAS-3 within 15 days and do not touch the money until it is filed, demat the allotment, stamp the shares, and – for foreign investors – file FC-GPR inside 30 days. Miss a clock and the cure ranges from late fees to the money being deemed a deposit. This is the complete closing sequence for a compliant round, in order, with every deadline.
The sequence, step by step
| # | Step | Deadline / rule |
|---|---|---|
| 1 | Valuation reports: registered valuer (Companies Act price) + CA/MB FEMA certificate if foreign money | Before the offer; keep within ~90 days of allotment |
| 2 | Board meeting: approve offer, call EGM | – |
| 3 | EGM special resolution (s.42 + s.62(1)(c)); file MGT-14 | MGT-14 within 30 days of the SR |
| 4 | PAS-4 offer-cum-application to identified persons; record in PAS-5 | ≤200 persons per FY (excl. QIBs/ESOP); no public ads |
| 5 | Money received by banking channel into a separate scheduled-bank account | No cash, ever |
| 6 | Allot (board resolution) | Within 60 days of receiving money; else refund within 15 days or pay 12% p.a. from day 61 + deposit treatment (s.42(6)) |
| 7 | File PAS-3 return of allotment | Within 15 days of allotment (private placement); funds cannot be utilised until filed (s.42(4)) |
| 8 | Credit shares in demat | Rule 9B: private companies (other than small companies) must allot in demat – ISIN and depository setup are now pre-closing items |
| 9 | Share certificates (where physical permitted) + stamp duty | Certificates within 2 months (s.56(4)); stamp duty on issue 0.005% |
| 10 | Registers updated (members, allotment); AoA amendment per SHA filed | Real time; MGT-14 for AoA SR |
| 11 | Foreign investors: FC-GPR on FIRMS | Within 30 days of allotment, per allottee – with FIRC/KYC and the valuation certificate |
| 12 | Convertible notes (if any in round): Form CN | Within 30 days of issue |
The four traps that actually catch companies
Trap 1 – the 60-day allotment clock starts when money is received, not when documents finish. Multi-tranche closings restart everything per tranche; investor delays in signing do not stop the clock. If closing conditions will overshoot, refund and re-collect rather than sit past day 60 – the 12% interest is the small penalty; deposit reclassification is the large one. Trap 2 – using money before PAS-3. s.42(4) bars utilisation until the return of allotment is filed; MCA adjudication orders have levied crore-scale penalties for salaries paid from round proceeds days before filing. Wire discipline: keep proceeds in the separate account until PAS-3’s SRN exists. Trap 3 – the demat gate. Since the Rule 9B deadline passed (30 June 2025), a non-small private company that never dematerialised cannot validly allot at all – ISIN creation takes 2–4 weeks, so start it with the term sheet, not the closing. Trap 4 – the FC-GPR month. Every foreign allottee needs FC-GPR within 30 days with the pricing certificate attached; the late-submission fee is automatic and diligence-visible. Track every clock in one place – the FEMA deadline calculator generates the calendar from your allotment date.
Stamp duty in one paragraph
Issue of securities: 0.005% of issue price, uniform across India since July 2020, collected through the depository for demat issues. Transfer of shares (secondaries closing alongside the round): 0.015% on consideration. One live wrinkle: some states have begun demanding duty under state stamp laws on physical certificates despite the central levy – one more reason demat allotment is the cleaner path. Budget both amounts into closing costs; they are small but non-optional.
Foreign-money overlays
Beyond FC-GPR: confirm the sector sits on the automatic route (else approval precedes money), run Press Note 3 beneficial-ownership checks on every investor, ensure the inward remittance carries the right purpose code with FIRC and KYC from the remitting bank, and diarise the annual FLA return every 15 July thereafter. The FIRMS portal guide covers Entity Master setup – do it before the round, since first-time registration mid-closing burns days. Full FEMA pricing mechanics live in the pricing guide.
Closing a round this quarter?
My Cloud Accountant runs the entire sequence – valuations, resolutions, PAS forms, demat, stamp duty, FC-GPR – against a dated checklist your investor can see.
Talk to an expertFrequently Asked Questions
Can we accept money before the special resolution?
No – the s.42 sequence requires the SR and PAS-4 offer before funds move. Money received ahead of the offer risks deposit characterisation from day one. If an eager investor wires early, hold it unappropriated and complete the sequence fast – or refund and re-collect properly.
Is the 15-day PAS-3 deadline the same for every allotment?
Fifteen days applies to private placements under s.42; other allotments (e.g., rights issues) carry 30 days under the PAS Rules. Either way the s.42(4) no-utilisation rule attaches to private-placement money specifically – treat PAS-3 as the unlock, not a formality.
What if our company never completed dematerialisation?
Complete it before the round: appoint an RTA, obtain the ISIN, and have promoters demat their own holdings (a Rule 9B precondition for fresh issues). Until then the company cannot validly allot securities – investors’ counsel will treat demat status as a condition precedent anyway.
Do these steps apply to a convertible-note raise too?
The CN rides lighter – board/SR authorisation, the ₹25 lakh single-tranche minimum, Form CN in 30 days for foreign subscribers – but conversion later triggers the full allotment sequence including PAS-3 and FC-GPR. The convertible note guide covers both ends.
Last reviewed: August 2026. Companies Act 2013 ss.42, 56, 62, 117; PAS Rules (incl. Rule 9B; deadline expired 30 June 2025); Indian Stamp Act as amended (0.005%/0.015%); FEM (NDI) Rules reporting (FC-GPR 30 days, FLA 15 July). All filings on MCA V3.