Term Sheet (India-Specific)

Indian term sheets have specific structural differences from US term sheets that founders must understand. The key differences: Indian startups use CCPS (Compulsorily Convertible Preference Shares) rather than US-style convertible preferred stock. CCPS must convert to equity at IPO or acquisition under Indian company law — creating a parallel equity class that needs careful management.

Indian SHA (Shareholders' Agreement) requirements include: affirmative voting rights (investor veto on major decisions), reserved matters (a list of actions requiring investor approval), and drag-along/tag-along provisions. The SHA is supplemented by the SSPA (Share Subscription and Purchase Agreement) which documents the actual share issuance.

RBI approval requirements, FEMA filings for foreign investment, and NCLT (National Company Law Tribunal) compliance add regulatory complexity absent from US deals.

India-specific term sheet clauses to watch: Affirmative Voting Rights (investors can veto budget approval, fundraising, M&A, and key hires — wider scope than US veto rights). DRHP filing rights (investors may require approval rights on IPO timing). Ratchets (performance-linked share issuance that dilutes founders if targets are missed — more common in Indian deals than US). Management Fee clauses in some Indian deals.