Investors failed to send second round of money what to do

515 votes

You need to show a document first which establishes your relationship with the persons you mentioned. Under what capacity they were investing ? what documents you have to show your relationship with the remaining nine investor. If you do have some documents, firstly we can send them a letter, then a notice or mediate. Finally I can suggest on looking at the documets

Advocate Shekhar Raj Sharma LawRato

684 votes

Hi,
There are a couple of things which would be important for you to note:
1. Did you execute a binding term sheet with that particular Investor? If yes, was there a 'Closing Date' i.e. the date on which the money was supposed to be transferred to you? If there was a binding term sheet in which there was a closing date, and there was no action required from your part that was not performed, then you may have a remedy.
2. If there was no binding term sheet, was there any definitive agreement that was executed between you and that investor (I'm assuming there isn't since your question states that the documentation and allotment has not yet been completed)? If, however, there was a definitive agreement which stated that the investor would transfer the funds, and he hasn't done so, then again you may have a remedy.

Assuming then, that there is no binding document executed between you and that investor for the obligation on the investor to pay the investment amount, there may be a possibility that the emails exchanged between you and that investor,could be interpreted as a binding agreement and on that basis, the investor may be required to honor his commitment.

All these options, and any additional options are dependent on the agreements, communications, documents that are part of the fund raising round.

Advocate Aditya Singha LawRato

567 votes

A lot would depend on the terms of the contract you have signed with the investor. Your legal recourse may range from seeking specific performance to forfeiture of the unpaid shares/ unsubscribed shared and/or bring in other investors since the first one failed to bring in the promised investment. It is important to review the relevant agreements/ term sheet/ documents before advising on this this. Do let me know if you you would like the agreements to be reviewed for a proper advice. There are several ways a company can raise funds under the law but subject to the specific contracts.

Advocate Joydeep Nath LawRato