Investors check the paperwork. It helps if you have already.

• Equity in the form of shares is issued by a company under the Companies Act, 2013; a sole proprietorship or an ordinary partnership does not issue shares
• A private company is defined by its articles as restricting the transfer of its shares and limiting its members to 200 (excluding current and former employees), and as not inviting the public to subscribe
• If your business is a proprietorship or partnership, ask early whether and how it should change structure, and what that does to contracts, registrations and tax
• Why an investor's lawyer will start with the structure

Hypothetical example: a founder remembers promising a mentor a small stake in return for early help. Nothing was written. When an investor asks who owns what, the founder has to choose between ignoring it and reopening it. A made-up case showing why such promises should be recorded or settled early.

• A clear list of every shareholder, the shares held and the dates issued
• Statutory registers and filings kept up to date, and matching what the company records say
• Dilution: how new shares reduce each existing holder's percentage
• Founder shares, vesting and any promises made to early backers, written down
• Promises of 'a share' to friends, early staff or advisers that were never papered

• Equity: shares in return for money
• Convertible instruments, which convert into equity on a later event, on terms set in the document
• Loans and other debt, repaid with interest regardless of how the business does
• Grants and support schemes, which may carry conditions
• Why each has different consequences for control, repayment and tax, a question for your advisers

• A term sheet summarises the main terms of a proposed deal before the full agreements are drawn up
• No Indian statute defines its legal nature; in practice the commercial terms are usually non-binding, while some clauses, such as confidentiality and exclusivity, commonly are binding
• Exclusivity ('no-shop') can stop you talking to other investors for a stated period
• Terms commonly negotiated: valuation, board seats, approval rights, information rights, and what happens on a later sale
• Why a lawyer should read it before you sign

Check which clauses are binding in the specific document you are given.

• Incorporation documents, statutory records and annual filings
• Founder, shareholder and customer agreements
• Ownership of the brand, software and other IP, including written assignments from freelancers and founders
• Employment documents, including appointment letters and statutory compliance
• Tax and GST records, loans and any disputes or notices
• A data room: one organised place for all of it

• An employee stock option plan lets a company grant employees the option to buy its shares in future
• Under Section 62(1)(b) of the Companies Act, 2013, issuing shares to employees under such a scheme needs a special resolution of the shareholders, and the Companies (Share Capital and Debentures) Rules, 2014 set the conditions
• Promoters and holders of more than 10% are generally not eligible to receive options, with a time-limited exception for startups recognised by DPIIT, subject to conditions
• Why employee promises should not be made informally, and why records and tax treatment need advice

• Under Section 42 of the Companies Act, 2013, a private placement is an offer to not more than 200 persons in a financial year; beyond that, the offer is treated as an offer to the public with stricter rules
• Money from investors outside India brings foreign exchange rules, including pricing and reporting requirements to the Reserve Bank of India within stated time limits
• Approvals and filings that follow an allotment of shares, handled by your company secretary
• Never promising investors returns, which is a separate risk
• Why a professional should run the process