Investor Data Room Setup & Management

A Series A data room should include audited financial statements for the last three financial years prepared under the applicable accounting standards (Schedule III of the Companies Act 2013 for companies, or equivalent), the current-year management accounts with variance analysis, a board-approved financial model with assumptions, all tax returns filed (ITR-6 for companies) and assessment orders or notices received for the last six years (the standard scrutiny limitation period under Section 153 of the Income-tax Act 1961 is six years for non-fraud cases), GST returns (GSTR-1, GSTR-3B, and GSTR-2B reconciliation for the last three years), and the cap table showing current shareholding structure with the register of members under Section 88 of the Companies Act 2013. TDS return summaries (Form 26Q/27Q) and any pending statutory liabilities should also be disclosed.

A foreign investor will specifically require: the Certificate of Incorporation, PAN card, and current MOA and AOA (including all amendments filed with MCA); board and shareholder resolutions for all significant transactions over the last five years; the statutory registers (members under Section 88, directors under Section 170, related-party contracts under Section 189 of the Companies Act 2013); all FEMA filings including FC-GPR, FC-TRS, and ODI forms filed with the authorised dealer bank; details of any existing foreign investment including sectoral cap compliance under the Consolidated FDI Policy; and a legal opinion on the company's corporate status. SEBI disclosures are additionally required if the company has any listed securities. Investors also frequently ask for the full cap table in a waterfall model showing returns at various exit scenarios.

For private placements of unlisted securities to qualified institutional buyers or accredited investors under Section 42 of the Companies Act 2013, the company must issue a private placement offer letter in Form PAS-4 under Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules 2014. The data room is not separately regulated by SEBI for private limited companies, but if the company has listed debt securities or is a listed entity, SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 and SEBI (Prohibition of Insider Trading) Regulations 2015 apply. The PIT Regulations require that any unpublished price-sensitive information (UPSI) shared in a data room with potential investors must be structured through a Non-Disclosure Agreement and the sharing must be logged — failure to maintain such a log exposes promoters to Regulation 3 violations. All data room access should be through a structured NDA with clear confidentiality and non-use provisions.

Venture capital investors conduct IP and HR diligence to verify that all intellectual property created by founders, employees, and contractors is formally assigned to the company. The data room should include: IP assignment agreements from all co-founders (executed at incorporation or thereafter); Intellectual Property Assignment clauses in all employee appointment letters and contractor agreements (which should survive termination); trademark registration certificates under the Trade Marks Act 1999 and patent filings under the Patents Act 1970 with the Intellectual Property India (Controller General of Patents); and evidence of copyright subsistence for software, content, or creative works. Employment agreements should be reviewed for non-compete, non-solicitation, and confidentiality provisions. Key person risk is assessed against employee stock option (ESOP) documentation, which must comply with Rule 12 of the Companies (Share Capital and Debentures) Rules 2014.

A CA's role in data room preparation is typically that of a preparer and verifier rather than a certifier with statutory liability, unless the engagement specifically involves issuing a Certificate under Sec 92E, IT Act 1961 (≡ §172, IT Act 2025) (Transfer Pricing), Form 15CB (remittance certification), or a Net Worth Certificate under any SEBI or banking regulation. For due diligence-related financial summaries, the CA prepares an 'Agreed-Upon Procedures' report or a financial due diligence report under SA 920 (Engagements to Perform Agreed-Upon Procedures regarding Financial Information) — this report does not constitute an audit opinion and the CA's liability is limited to the accuracy of procedures performed. If the CA certifies a Net Worth or Profitability Certificate for a regulatory purpose (such as for a banking facility), the CA bears professional liability under the Chartered Accountants Act 1949 and the ICAI Code of Ethics, and such certificates are signed under the CA's personal membership number.