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Home / Fundraising & Captable / iSAFE Notes & Convertible Instruments & Convertible Instruments
Last updated: 2 October 2026
Early-stage startups often raise money now and set the valuation later. In India that is done through instruments such as iSAFE (issued as CCPS) and convertible notes. Expertvuw’s team helps structure the instrument, complete Companies Act approvals and filings, and handle FEMA reporting for foreign investors.
The US-style SAFE is not a recognised instrument under Indian company law, so Indian startups use equivalents. iSAFE (India Simple Agreement for Future Equity), introduced by 100X.VC, is legally issued as compulsorily convertible preference shares (CCPS) under sections 42, 55 and 62 of the Companies Act, 2013. It is not debt, has no redemption, and converts into equity at a later priced round or specified event, at a discount or valuation cap agreed upfront.
Convertible notes are debt instruments that convert into equity. For DPIIT-recognised startups, a convertible note of ₹25 lakh or more received in a single tranche, and converted or repaid within ten years, is exempt from the deposit rules. Convertible notes from non-residents are permitted for DPIIT startups and reported in Form CN on FIRMS within 30 days.
Only companies can issue these instruments — not LLPs. The issue must follow private placement or preferential allotment procedures, with valuation and filings, and with FEMA pricing rules for foreign investors.
Basis: Companies Act, 2013 (sections 42, 55, 62); Companies (Acceptance of Deposits) Rules, 2014 – Rule 2(1)(c)(xvii); FEM (Non-debt Instruments) Rules, 2019; RBI Master Direction – Foreign Investment (Form CN). Last updated: 27 September 2026.
Indian startups use iSAFE (CCPS) or convertible notes instead.
Issued as compulsorily convertible preference shares.
DPIIT startups: ₹25 lakh or more per tranche, convert or repay within 10 years.
Convertible notes reported in Form CN within 30 days.
LLPs cannot issue these instruments.
Private placement or preferential allotment rules apply.
Convertible rounds are simple commercially but not legally.
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Convertible instruments connect with these services.
Preparing for angel rounds.
DPIIT recognition.
Company law steps for funding.
Foreign investment rules.
Choose the instrument.
Finalise conversion terms.
Board and shareholder resolutions.
Private placement offer and receipt of funds.
Allot and file with MCA.
FEMA reporting where applicable.
Conversion needs its own compliance.
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Share your query and our team will reply during business hours.
A US-style SAFE is not a recognised instrument; Indian startups use iSAFE (issued as CCPS) or convertible notes.
An India-specific SAFE structure issued as compulsorily convertible preference shares.
DPIIT startups can issue notes of ₹25 lakh or more per tranche, converting or repaid within ten years.
No. Only companies can.
Yes, subject to FEMA rules; convertible notes are reported in Form CN within 30 days.
ACS – Director, Expertvuw Management Pvt Ltd
Fundraising support is provided by Expertvuw’s team. Expertvuw does not guarantee funding, does not solicit investment from the public and is not a SEBI-registered intermediary; valuations and certifications come from independent eligible professionals.