Verified Compliance Content: This guide has been technically reviewed and verified for accuracy by our panel of Chartered Accountants (CA) and Company Secretaries (CS) to ensure it meets 2026 regulatory standards.
Instruments convertible at future valuation
If you do not want to decide on valuation right away you can issue instruments like CCD and Convertible notes which will be converted into equity at a later date valuation. This is ideal for startups raising seed or angel rounds. You do not have to worry about the valuation and you can value when you raise next big round
| Convertible Notes | Compulsorily Convertible Debentures | Optionally convertible Preference Shares |
Who can issue |
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Other Conditions | Minimum amount of Rs 25 Lakhs to be raised from 1 investor in 1 tranche | No minimum amount | No minimum amount |
Valuation report requirement | Valuation report not required | Valuation report required | Valuation report required |
Separate Bank Account | Not required to open a separate bank account | Separate bank account needs to opened | Separate bank account needs to opened |
Time Taken | 3 Days | 15 days | 15 days |
Paper Work and Process | This is the simplest way to raise the funds. Founders do not have to worry about the valuation. The value is decided in the next round and the investors
| This is a bit long process and requires more documentation. Steps:
| This is a bit long process and requires more documentation. Steps:
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Our Comments – Convertible notes is the simplest and best option. It is similar to I safe notes used by Y combinator is USA. Investor are a bit apprehensive about this as it is fairly a new concept in India
Instruments when the valuation is already decided
If the founders and investors have already agreed on a value then you can issue equity shares, compulsorily convertible preference shares or CCD
| Equity Shares | Compulsorily Convertible Debentures | Optionally convertible Preference Shares |
Who can issue |
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Valuation report requirement | Valuation report required | Valuation report required | Valuation report required |
Separate Bank Account
| Separate bank account needs to opened | Separate bank account needs to opened | Separate bank account needs to opened |
Time Taken | 15 Days | 15 days | 15 days |
Paper Work and Process | This is a bit long process and requires some documentation. Steps:
| This is a bit long process and requires some documentation. Steps:
| This is a bit long process and requires some documentation. Steps:
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Our comments – Investors generally ask for CCPS as they have the forst right over the assets incase company liquidates. Its beneficial for startups as well as the preference share holders and CCD holders do not need to be called to EOGM.
About Rohit Lohade
Rohit Lohade is a Chartered Accountant with 15+ years of experience. He has assisted more than 300 Gobal Companies with India Entry Strategy