CCPS (Compulsorily Convertible Preference Shares)

CCPS (Compulsorily Convertible Preference Shares) is an equity instrument used in almost all Indian institutional venture rounds. It is structured as preference shares that compulsorily convert to common equity at a defined trigger event — typically the next funding round, IPO, or acquisition.

Unlike US convertible preferred stock, CCPS conversion is mandatory under Indian company law — investors cannot keep it as preferred indefinitely. The instrument carries preference rights (liquidation, anti-dilution, sometimes dividend) during its preference phase, but converts to common at the trigger.

CCPS is the SEBI-preferred and FEMA-friendly path for both Indian and foreign investors. AIF Cat-I and Cat-II funds invest almost exclusively through CCPS in India.

CCPS is the legal default for Indian seed and Series A rounds in 2026. Indian institutional VCs (Sequoia/Peak XV, Accel India, Stellaris, Matrix India) issue CCPS with 1x non-participating liquidation preference and standard anti-dilution as the baseline. Foreign capital deployed into India through the FEMA automatic route flows through CCPS for most sectors.

Conversion ratio is fixed at issue (typically 1:1 unless anti-dilution triggers); preference share dividends are usually optional/discretionary, not mandatory.