Instrument Structuring
Under FEMA, only certain instruments count as foreign direct investment — equity shares, compulsorily convertible debentures, and compulsorily convertible preference shares — and each carries distinct mechanics for pricing, returns, and conversion. Instruments that would be routine elsewhere (optionally convertible notes, debt with equity kickers) fall outside the FDI perimeter and into the far more restrictive debt regime. Choosing the wrong paper does not just complicate a deal; it can render the investment structure itself non-compliant.
We design instruments that deliver the commercial deal inside the regulatory perimeter. Conversion formulas for CCDs and CCPS are drafted to comply with pricing guidelines at both issue and conversion — a technical trap that catches structures drafted abroad; investor protections (anti-dilution, liquidation preference, exit rights) are built to be enforceable and FEMA-executable; and the instrument mix is planned against future rounds, so today's structure does not become tomorrow's repair project when the Series B arrives with different investors and better lawyers.
What this covers
- Instrument selection: equity, CCD, and CCPS mechanics compared against your return, control, and exit objectives.
- Conversion-formula drafting compliant with FEMA pricing at issue and conversion.
- Investor-protection terms — preference, anti-dilution, exit rights — structured for Indian enforceability.
- Round architecture: instrument planning across anticipated funding stages.
- Repair structuring where existing instruments have compliance defects.
Who needs this
Foreign investors negotiating Indian investment terms; founders raising from offshore funds; and counsel who need term sheets translated into FEMA-valid paper.
How we deliver
- Term-sheet review against FEMA instrument rules before positions harden.
- Instrument documents drafted with conversion mechanics compliant at issue and conversion.
- Round architecture mapped so today's paper survives tomorrow's investors.
Why A2 Consultants
We have repaired enough foreign-drafted instruments to know exactly where they break — our structures deliver the commercial deal inside the regulatory perimeter the first time, which is cheaper than elegance repaired later.
Engagement & what to expect
Instrument engagements typically run inside a live funding round, with our review attached to the term sheet and our drafting integrated into the definitive documents over two to six weeks. Conversion mechanics, pricing compliance, and protection enforceability are resolved before signature rather than litigated after. Standalone engagements — repairing defective instruments, restructuring ahead of new rounds — begin with a defect assessment and proceed through corrective documentation and any required regulatory regularisation. Either way, the deliverable is paper that delivers the commercial deal inside the regulatory perimeter, first time.
The term sheet describes the deal; the instrument is the deal — make sure the second can legally deliver the first.