Start-ups will now get five more years to convert convertible notes into equity shares. This is one of various changes in Foreign Exchange Management (Non-debt Instruments or NDI) Rules, 2019, notified by the Finance Ministry. Another important change intends to allow an Indian company to issue share-based employee benefit to a person outside India.
Against this backdrop, Yashojit Mitra, Partner at Economic Laws Practice (ELP) has been quoted by BusinessLine in their article titled ‘Start-ups to get 5 more years to convert ‘convertible notes’ into equity shares’. Yashojit is of the opinion that the change would give more flexibility to structure investments through the venture debt route.
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