Do I need to register start up before receiving funding

839 votes

At first, congratulations for clearing the hardest and most required step fr a start-up i.e. Funding. Now, in relation to your query, you need to register the start-up before raising funding because you can allot the equity when you have it. Also proper documentation in regard to funding transaction needs to be in place. Shareholder agreement, co-founder agreement (if you have co-founder) and other documents needs to be drafted.

Advocate Kanishk Agarwal LawRato

1000 votes

Any funding is a subject matter of scrutiny by the Finance department of the Government of India. Further to this, in the current budget the Government has given a special focus over the start-ups and their investment procedure asking the concerned authority and department to have a look over the same. This is being done to insure that no such money is being flushed in to the market which has been earned by someone illegally.
So you need to register your start up be it a LLP, Pvt Ltd Company or Public Limited Company and then a separate Contract of Equity will be signed in between you and your funding organisation to execute this funding process.
Further procedure can be detailed out only if I have full papers on my table.

Advocate Pulkit Prakash LawRato

846 votes

Hi! Yes you must have an entity registered- it may be a Pvt. Ltd. company or a partnerships or a LLP...my experience says that start ups prefer Pvt. Ltd. company mostly. There are pros and cons for each of these business models though.

Coming to your second question, yes that is indeed a lawyer's job and no one else's. I did not understand ten last bit of your question - "how much share is associated with 10per cent share"

It appears that ur little clueless with co pant law aspects. I will advise you to touch base with some lawyer, understand stuff n then go ahead with investment rounds.

All the best!

Advocate Mansi Airi Gambhir LawRato