CCPS vs CCD vs Equity: Startup Instrument Selection Evidence File
The instrument you choose decides control, conversion, valuation, investor rights, tax and future cap table pain.
For the connected rule, example or next step, see Angel Tax and Valuation Evidence: Startup Share Premium Defence File.
Why this can go viral
Detailed analysis
Equity is simple ownership, CCPS gives preference features with conversion, and CCD is debt-like until conversion. Each needs legal, valuation, FEMA and cap-table modelling.
Practical example
Foreign investor proposes CCD because valuation will be clearer in 18 months. Finance models interest, conversion ratio, FEMA reporting, future dilution and whether investor rights are acceptable before signing.
Evidence and control checklist
| Area | What to check | Evidence to save |
|---|---|---|
| Legal trigger | What law/filing/commercial event makes CCPS CCD equity decision risky. | Legal note, board approval and filing tracker. |
| Financial impact | Dilution, tax, cash, accounting or investor-reporting impact. | Computation sheet and CFO sign-off. |
| Document trail | Whether every claim is backed by contract, certificate or portal filing. | Indexed folder with PDFs and screenshots. |
| Review owner | Who prepares, reviews and signs off. | Owner matrix and version log. |
| Investor/audit view | How this will look in diligence, audit or future round. | Diligence memo and exception tracker. |
For the connected rule, example or next step, see Board-Approved Annual Operating Plan: Startup AOP Evidence File.
Common mistakes
- Choosing instrument only because investor suggests it.
- No conversion-dilution model.
- Ignoring FEMA pricing/reporting for foreign investment.
- No accounting/tax review.
- Term sheet and articles not aligned.
Official reference framework
Based only on official India Code, Startup India, RBI, Income Tax Department and ICAI source pages listed below. Check latest law, forms, portal rules, FEMA pricing/reporting requirements and professional advice before execution.
Official sources used
This article is source-limited to official India Code, Startup India, RBI, Income Tax Department and ICAI material. Source validation date: 17 June 2026. Verify final positions with latest law, FEMA regulations, forms, valuation guidance and professional advice before execution.
- India Code: Companies Act, 2013 official PDF
- RBI: Foreign Direct Investment in India
- RBI: Master Circular on Foreign Investment in India
- India Code: Foreign Exchange Management Act, 1999 official PDF
For the connected rule, example or next step, see GST Classification Dispute: HSN, SAC and Rate Evidence File.
FAQs
Because investors, auditors, banks and regulators usually test whether numbers, approvals and filings match the story told in the pitch or MIS.
Signed agreements, board approvals, valuation workings, statutory filings, bank proof and one clean summary tracker.
Some gaps can be remediated, but rushed fixes may delay closing or reduce investor confidence.
Finance/controller should own the evidence file with legal, company secretary and founder inputs.
No number without source, no share issue without cap-table impact, and no investor claim without evidence.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Startup Finance & Cap Tables
- Official starting point
- www.startupindia.gov.in