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Investor Money at Risk following IPO Delay
16-Oct-2024 (In Corporate Law)
A startup raised 100 Cr from 98 investors including myself in Jan ‘24. Founders promised an IPO by April ‘24 & assured 4x returns issuing post-dated chqs for that amount. IPO didn’t happen. I got post-dated chqs for Jan ‘25. Some investors with Sept 2024 cheques faced stop payments to avoid bouncing. Founders have asked to hold off legal action till end of ‘24 as they try to secure more funding
• What can I do now to protect my interests while waiting?
• What are my options if I act immediately?
To protect your interests, document all communications with the founders, and consider sending a legal notice as a formal warning. If your cheque bounces, file a complaint under Section 138 of the Negotiable Instruments Act. You can also pursue a breach of contract suit if the founders made false promises. Forming a group with other investors may strengthen your position. While waiting, request transparency and suggest mediation for partial payments or security to back the post-dated cheques.
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Adv. Rohan Venkatesh Yemul
Mumbai | 100+ Answers
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From the query itself it seems that the medium to accumulate money seems to be crowd funding which is a method adopted by startups for generating funds. However it is not clear from the query how have you made the payment to the startup. Prima facie nothing can be said clearly about the legal remedies available to you except for the fact that you can deposit the cheque and get it bounced to initiate a cheque bounce case against the founders of the startup without their knowledge under S.138 of NI Act
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Adv. Parvez
Mumbai | 50+ Answers
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In order to protect your interests, you can execute further Contracts with them to seek concrete assurances along with evidences of the promises which they have been making with certain securities, you guys can keep with you, so as to get satisfaction within yourself, that, if they won't return your invested amount, then you can file Civil and Criminal Cases against them.
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Adv. Pankaj Bajaj
Mumbai | 1000+ Answers
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