Framework
1. Parties and background
THIS SHARE SUBSCRIPTION AGREEMENT is made on 30 October 2026 at Bengaluru between: (1) Saffron Labs Private Limited, a company incorporated under the Companies Act 2013 with CIN U72900KA2023PTC171234 and having its registered office at Bengaluru, Karnataka (the "Company"); (2) Ananya Rao and Vikram Menon, each an individual resident in India (together the "Promoters"); and (3) Marigold Capital Partners Fund II, a SEBI-registered Category II alternative investment fund acting through its investment manager Marigold Investment Advisors LLP (the "Investor"). WHEREAS: (A) the Company is engaged in the development and licensing of workflow software for mid-market manufacturers in India; (B) the Promoters and the Existing Investors hold the entire issued share capital of the Company as set out in Part A of Schedule 5 (the cap table); (C) the Investor has agreed to subscribe for, and the Company has agreed to issue and allot, the Series A CCPS for the Investment Amount on the terms of this Agreement, following the term sheet accepted on 15 September 2026; and (D) the Promoters have agreed to give the Warranties and undertakings in this Agreement in consideration of the Investor's subscription. NOW THIS AGREEMENT WITNESSES as follows.
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What it says
The opening page names the three sides: the company issuing the shares, the two founders who stand behind the promises, and the fund that is paying. The recitals set the scene: what the business does, who owns it today (the cap table in Schedule 5), that the deal follows the term sheet accepted on 15 September 2026, and that the founders are giving the warranties as the price of the investment. Recitals are not operative promises, but an arbitrator reads them when a clause is ambiguous.
What it means for you
You sign twice: once for the company and once as a Promoter in your own name. That second signature is what makes you personally liable under the warranties and the indemnity, up to your cap in Clause 17. Check the Investor's exact legal name, its SEBI registration number and that the LLP signing is its investment manager; an SSA signed by the wrong entity is a common closing-day delay. The angels are not parties here; they sign the SHA at Closing.
What is normal
At Series A the founders are almost always parties in their personal capacity, and in most Indian deals they give the business warranties alongside the company. Existing angels join the SSA only when they are also investing in the round or giving warranties, which is rare. One recital usually confirms that the term sheet is superseded; see Clause 26. Two to five recitals is the norm; ten or more is a sign of over-lawyering.
How to negotiate it
Ask for three things. First, that the Promoters are parties only for the clauses that name them (warranties, indemnity, conduct of business), not for every covenant of the company. Second, that the Investor's own warranties in Clause 16 are given to the Promoters as well as to the company. Third, that the recital on the term sheet confirms the economic terms in it are reflected here, so nothing agreed in September is quietly dropped in October.
2. Definitions and interpretation
2.1 In this Agreement, unless the context requires otherwise: "Business Day" means a day other than a Saturday, Sunday or public holiday on which scheduled commercial banks are open for business in Bengaluru and Mumbai; "Closing" means completion of the subscription for the First Tranche Shares under Clause 9, and "Closing Date" means the date on which Closing occurs; "Conditions Precedent" means the conditions in Schedule 1; "Disclosure Letter" means the letter of the same date as this Agreement from the Company and the Promoters to the Investor, together with any Supplementary Disclosure Letter delivered under Clause 15; "Fundamental Warranties" means the Warranties in paragraphs 1 (title and capacity) and 2 (capitalisation) of Schedule 3; "Investment Amount" means ₹20,00,00,000, comprising the First Tranche Amount of ₹14,00,00,000 and the Second Tranche Amount of ₹6,00,00,000; "Long-stop Date" means 31 January 2027 or such later date as the Parties agree in writing under Clause 7; "Milestone" means annual recurring revenue of the Company of not less than ₹6,00,00,000 computed in accordance with Schedule 6 and certified by the Auditors; "Series A CCPS" means the 2,00,000 Series A compulsorily convertible preference shares of face value ₹10 each having the rights set out in the Articles and the Shareholders' Agreement; and "Warranties" means the statements in Schedule 3. 2.2 Headings are for convenience only; a reference to a statute includes any amendment or re-enactment; "including" means including without limitation; and a reference to a Clause or Schedule is to a clause of or schedule to this Agreement.
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What it says
The dictionary of the agreement. Ten defined terms do most of the work: Business Day (bank working days in Bengaluru and Mumbai), Closing, Conditions Precedent, Disclosure Letter, Fundamental Warranties, Investment Amount, Long-stop Date, Milestone, Series A CCPS and Warranties. Every capitalised word in the later clauses means exactly what this clause says, and nothing else. The interpretation rules at the end stop arguments about headings, statutory amendments and the word 'including'.
What it means for you
Read this clause last, not first, and check each definition against the clause that uses it. 'Investment Amount' is the full ₹20 crore, so the indemnity cap in Clause 17 refers to the amount actually paid, which is ₹14 crore until the second tranche arrives. 'Milestone' points to Schedule 6, so the ARR definition there (what counts as recurring, how churn is treated) decides whether ₹6 crore of the money ever comes. 'Disclosure Letter' includes the supplementary letter, which is what lets you update it before Closing.
What is normal
Twenty to forty definitions is normal for a Series A SSA; more than sixty usually means a template built for a much larger deal. Business Day is almost always defined by reference to the company's city and Mumbai. Fundamental Warranties are limited to title, capacity and capitalisation in most deals; an investor-heavy draft adds tax and intellectual property to the list, which stretches the uncapped, unlimited-time treatment to warranties that should be capped.
How to negotiate it
Keep Fundamental Warranties to title, capacity and capitalisation. Make sure 'Investment Amount' for the purpose of the caps means the amount actually paid at the date of the claim, so your exposure is ₹14 crore and not ₹20 crore before the second tranche. Define 'Milestone' by reference to a schedule you have modelled with your auditors, with revenue recognition rules written down. Ask that the Long-stop Date definition carries the extension mechanism from Clause 7 rather than a fixed date alone.
3. Subscription
3.1 Subject to the terms of this Agreement, the Investor agrees to subscribe for, and the Company agrees to issue and allot to the Investor, 2,00,000 Series A CCPS at a subscription price of ₹1,000 per share, comprising a face value of ₹10 and a premium of ₹990, for the Investment Amount of ₹20,00,00,000. 3.2 The Series A CCPS shall be subscribed in two tranches: (a) 1,40,000 Series A CCPS (the "First Tranche Shares") for ₹14,00,00,000 (the "First Tranche Amount") at Closing; and (b) 60,000 Series A CCPS (the "Second Tranche Shares") for ₹6,00,00,000 (the "Second Tranche Amount") in accordance with Clause 11. 3.3 The Series A CCPS shall be issued fully paid and free from all Encumbrances by way of a private placement under Section 42 and a preferential issue under Section 62(1)(c) of the Companies Act 2013, and shall rank in accordance with the Articles and the Shareholders' Agreement, including a 1x non-participating liquidation preference ranking senior to the Seed CCPS. 3.4 Each Series A CCPS shall convert into one Equity Share at the Conversion Ratio set out in the Articles, subject to adjustment under the anti-dilution provisions of the Shareholders' Agreement, and in any event within 20 years of allotment. 3.5 The Promoters and the Existing Investors have waived any pre-emptive right in respect of the Series A CCPS under the Articles and the Seed Shareholders' Agreement dated 12 March 2024.
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What it says
The deal in numbers. Marigold buys 2,00,000 Series A CCPS at ₹1,000 each: ₹10 of face value and ₹990 of premium per share. The money comes in two parts, ₹14 crore for 1,40,000 shares at Closing and ₹6 crore for 60,000 shares later. The shares are issued under the private placement and preferential issue routes of the Companies Act, rank ahead of the seed investors on a liquidation, convert one for one into equity, and the existing shareholders have given up their right of first offer on the new shares.
What it means for you
This clause fixes the price for both tranches at ₹1,000, so if the company is worth more in a year the second ₹6 crore still buys 60,000 shares, and if it is worth less you are still obliged to sell at ₹1,000. The ranking words matter: 'senior to the Seed CCPS' means Marigold is paid its ₹20 crore before Ritika and Arjun see anything on a sale below the preference stack. The pre-emption waiver is a condition you must actually collect from the angels in writing; a missing waiver is a title defect under the Warranties.
What is normal
A single tranche is the norm at Series A; two tranches appear in roughly a quarter of deals, usually where revenue is early. Face value of ₹10 with the balance as premium is standard; the premium goes to the securities premium account under Section 52. A 1x non-participating preference is the market standard; 1.5x or participating is rare in 2026 outside distressed rounds. Conversion one for one, adjusted for anti-dilution, and a 20-year outer limit under Section 55 is in every CCPS deal.
How to negotiate it
Three asks. First, if there must be a second tranche, fix the price now (as here) and do not let it float with a later valuation, because a floating price is a disguised down-round option. Second, resist any wording that lets the Investor subscribe for fewer than all the Second Tranche Shares once the Milestone is met. Third, confirm that the anti-dilution is broad-based weighted average and sits in the Articles too, because a conversion ratio that lives only in the SSA is hard to enforce against a future round.
4. Subscription monies and use of proceeds
4.1 The Investor shall pay the First Tranche Amount by electronic transfer to the separate bank account of the Company with a scheduled commercial bank opened solely for the purpose of receiving monies under Section 42 of the Companies Act 2013 (the "Subscription Account"), details of which are set out in Schedule 2. 4.2 The Company shall not utilise any part of the Subscription Monies until the Series A CCPS have been allotted and the return of allotment in Form PAS-3 has been filed with the Registrar, and shall not use the Subscription Monies to repay any loan from, or any other amount owed to, a Promoter or a Related Party. 4.3 Subject to Clause 4.2, the Company shall apply the Subscription Monies towards the use of proceeds set out in the Business Plan approved by the Board, namely product development, sales and marketing expansion and working capital, and for no other purpose without the consent of the Investor Majority. 4.4 If the Series A CCPS are not allotted within 60 days of receipt of the First Tranche Amount, the Company shall refund the First Tranche Amount within 15 days thereafter, failing which it shall pay interest at 12 percent per annum from the end of the sixtieth day until repayment in accordance with Section 42(6). 4.5 The Company shall keep the Subscription Monies in the Subscription Account, and may place them in a fixed deposit with the same bank, until they are applied under Clause 4.3.
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What it says
The money goes into a dedicated bank account, not the operating account. It stays untouched until two things happen: the board allots the shares and the return of allotment in Form PAS-3 is filed with the Registrar of Companies. It can then be spent only on the uses in the board-approved business plan, and never to repay a founder loan. If the shares are not allotted within 60 days, the money goes back within 15 more days, with 12 percent interest if the company is late.
What it means for you
Open the separate account before you sign, not the week before Closing; banks take one to two weeks and ask for the board resolution and the PAS-4 draft. Plan cash so that payroll and vendor payments on the Closing week do not depend on the new money; you can spend it only after PAS-3, which here is filed by 12 December 2026 at the latest and in practice within two to three days of allotment. The founder-loan bar means any money you lent the company stays in until the Investor Majority agrees otherwise under the related party rules.
What is normal
Every Indian SSA carries the Section 42 mechanics because the law leaves no choice: separate account, allotment within 60 days, PAS-3 within 15 days, and no use before both. The use-of-proceeds list is usually three to five heads with a 10 to 20 percent flexibility band between them. A bar on repaying founder loans or paying founder bonuses from the proceeds appears in most deals. Interest on a delayed refund is 12 percent by statute, so there is nothing to negotiate on that number.
How to negotiate it
Ask for a reallocation band: the company may move up to 20 percent of the proceeds between the approved heads without consent. Ask that the Investor's cost reimbursement under Clause 23 counts as an approved use so you are not in breach the day you pay it. Carve out repayment of any founder loan that the Investor has already seen in the data room and approved, and permit fixed deposits so ₹14 crore does not sit idle in a current account for three weeks.
Conditions and closing
5. Conditions precedent
5.1 The obligation of the Investor to subscribe for the First Tranche Shares is conditional upon the satisfaction, or waiver by the Investor under Clause 6, of each of the Conditions Precedent set out in Schedule 1, namely: (a) completion of the Investor's legal, financial and tax due diligence and delivery of a closing memorandum by the Investor's advisers in the agreed form; (b) the Shareholders' Agreement and the Deed of Adherence being in agreed form; (c) the passing of the special resolutions under Sections 42 and 62(1)(c) of the Companies Act 2013 approving the issue of the Series A CCPS and the filing of Form MGT-14; (d) the adoption of the restated Articles in the agreed form; (e) the adoption of the Saffron Labs Employee Stock Option Plan 2026; (f) execution of the employment, intellectual property assignment and non-compete agreements by each Promoter in the agreed form; (g) delivery of accepted proposals for key person insurance of ₹5,00,00,000 on each Promoter and D&O insurance of ₹5,00,00,000; (h) delivery of a valuation report from a registered valuer under Rule 13 of the Companies (Share Capital and Debentures) Rules 2014 justifying the subscription price; (i) the Company's DPIIT recognition remaining valid; (j) issue of the private placement offer letter in Form PAS-4 and maintenance of the record in Form PAS-5; (k) opening of the Subscription Account; and (l) no Material Adverse Change having occurred, confirmed by an Officer's Certificate dated the Closing Date. 5.2 The Conditions Precedent are for the sole benefit of the Investor, save that Condition (b) is for the benefit of all Parties.
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What it says
Twelve things must be true before Marigold has to pay. Diligence finished and written up in a closing memorandum, the SHA agreed, the shareholders' special resolutions passed and filed, the restated Articles and the ESOP adopted, the founders' employment and IP agreements signed, insurance proposals accepted, a registered valuer's report justifying ₹1,000 per share, DPIIT recognition still valid, the PAS-4 offer letter issued, the separate bank account open, and no material adverse change by Closing. Most are for the Investor's benefit alone, so only the Investor can waive them.
What it means for you
This list is your project plan for the four weeks after signing. Each item needs an owner and a date; the tracker on this page shows who does what. The dangerous version of item (a) reads 'completion of due diligence to the satisfaction of the Investor', which lets the Investor walk away for any reason. Saffron's version requires a closing memorandum in an agreed form, which means diligence is closed when the advisers say so in writing, not when the Investor feels like it. The MAC condition is the other exit door; its definition in Schedule 1 should exclude market-wide events.
What is normal
Eight to fourteen conditions is normal at Series A. Diligence completion, the special resolutions, the restated Articles, founder agreements, a valuation report and no MAC appear in almost every deal. Insurance appears in most deals above ₹10 crore. A 'satisfactory diligence' condition survives in about a third of first drafts and is removed or softened in most negotiated agreements. Conditions that depend on third parties (customer consents, lender waivers) should carry a fallback, because you cannot control them.
How to negotiate it
Ask for four changes. Replace 'satisfactory to the Investor' with 'completion of due diligence and delivery of a closing memorandum', with a deadline for the Investor's advisers to deliver it. Define MAC narrowly: a sustained event specific to the company, excluding industry, market, regulatory and force majeure events, and excluding anything disclosed. Move items you can only start after signing (insurance policies, the D&O cover) into conditions subsequent. Make the agreed-form documents conditions for all parties, so the Investor cannot reopen the SHA after you have signed the SSA.
6. Satisfaction and waiver of the Conditions Precedent
6.1 The Company and the Promoters shall use their best endeavours to procure the satisfaction of the Conditions Precedent (other than Condition (a), which is within the control of the Investor) as soon as reasonably practicable and in any event before the Long-stop Date. 6.2 The Company shall keep the Investor informed of progress towards satisfaction of each Condition Precedent and shall promptly notify the Investor in writing on becoming aware of any fact or circumstance that may prevent a Condition Precedent from being satisfied before the Long-stop Date. 6.3 Within 2 Business Days of the satisfaction of the last of the Conditions Precedent (other than Condition (l)), the Company shall deliver to the Investor a notice in the form set out in Part B of Schedule 1 (the "CP Satisfaction Notice") together with evidence of satisfaction of each Condition Precedent in the form specified in Schedule 1. 6.4 The Investor shall, within 5 Business Days of receipt of the CP Satisfaction Notice, confirm in writing that it is satisfied that the Conditions Precedent have been satisfied, or identify in writing the Conditions Precedent that in its reasonable opinion remain unsatisfied and the deficiency in each case. 6.5 The Investor may, in its sole discretion and only by notice in writing, waive any Condition Precedent in whole or in part, subject to such conditions as it may specify, and the Company shall satisfy any waived Condition Precedent that is capable of subsequent satisfaction within 30 days of Closing. 6.6 The Investor shall use reasonable endeavours to complete its due diligence and deliver the closing memorandum under Condition (a) within 10 Business Days of the date of this Agreement.
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What it says
The process clause. The company and founders must do their best to satisfy the conditions before the long-stop date and keep the Investor updated, including about anything that could stop a condition being met. When the last one is done, the company sends a CP satisfaction notice with the evidence. The Investor has five business days to accept or to say in writing exactly what is still missing. Only the Investor can waive a condition, and only in writing; a waived condition that can still be done becomes a post-closing obligation.
What it means for you
'Best endeavours' is a heavy standard in Indian law: it means doing everything a prudent person determined to achieve the result would do, including spending money. Keep an evidence file from day one so the CP satisfaction notice is a cover letter, not a scramble. The five business day response window is your protection against silence: without it, the Investor could sit on the notice until the long-stop date. The waiver rule cuts both ways: a verbal 'do not worry about the insurance' from the Investor's partner is not a waiver, so get it in an email at the least.
What is normal
A CP satisfaction notice with a 3 to 7 business day response window is standard in negotiated deals, although many first drafts omit the response deadline. 'Best endeavours' for the company and 'reasonable endeavours' for the investor is the usual asymmetry. Waiver by the investor alone, in writing, is universal. A 30-day period to complete a waived condition after Closing is common; 60 days appears in deals with slow third parties.
How to negotiate it
Ask for 'reasonable endeavours' instead of 'best endeavours' for the conditions that depend on third parties, such as customer or lender consents, so you are not in breach because someone else is slow. Keep the Investor's response window at 5 Business Days and add a deemed-satisfaction rule: if the Investor neither confirms nor objects within that window, the conditions are deemed satisfied. Put a deadline on the Investor's own diligence condition, as Clause 6.6 does, and require the Investor to state its objections once, in full, so new points cannot be raised after each reply.
7. Long-stop Date and termination before Closing
7.1 If Closing has not occurred on or before the Long-stop Date of 31 January 2027, other than as a result of a breach of this Agreement by the Party seeking to terminate, either the Investor or the Company (acting with the consent of the Promoters) may terminate this Agreement by notice in writing to the other Parties, provided that the Parties shall first discuss in good faith for a period of 10 Business Days whether to extend the Long-stop Date and may extend it by agreement in writing. 7.2 The Investor may terminate this Agreement by notice in writing before Closing if: (a) a Material Adverse Change occurs; (b) there is a breach of a Fundamental Warranty, or a breach of any other Warranty or of Clause 8 which is material in the context of the transaction and which, if capable of remedy, is not remedied within 10 Business Days of notice; or (c) an insolvency event occurs in relation to the Company. 7.3 On termination under this Clause 7, this Agreement shall cease to have effect, save that Clause 1, this Clause 7, Clause 22 (Confidentiality), Clause 23 (Costs), Clause 25 (Governing law and dispute resolution) and Clause 26 (Miscellaneous) shall survive, and termination shall be without prejudice to any accrued rights or liabilities of any Party. 7.4 Any Subscription Monies received by the Company before termination shall be refunded to the Investor within 15 days of termination without interest, save as required by Section 42(6) of the Companies Act 2013.
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What it says
The exit door before the money moves. If Closing has not happened by 31 January 2027, either side can end the agreement, unless its own breach caused the delay, and only after a ten business day conversation about extending. The Investor alone can also terminate for a material adverse change, a serious uncured warranty breach, a breach of the pre-closing conduct rules, or the company's insolvency. Confidentiality, costs and disputes survive termination, and any money already received goes back within 15 days.
What it means for you
Ninety-three days from signing to long-stop is comfortable for a deal with twelve conditions; the risk is a condition outside your control, such as a bank account that takes three weeks to open. The termination right is mutual, which protects you from an Investor who delays its own diligence and then walks away citing the long-stop. The founder consent requirement in Clause 7.1 means the company cannot terminate behind the founders' backs. The 10 Business Day cure period in Clause 7.2(b) is what turns a surprise into a conversation; without it, a minor breach found on Closing week could end the deal.
What is normal
Sixty to one hundred and twenty days from signing to long-stop is normal at Series A; 45 days is tight, 180 days is unusual outside regulated sectors. Termination for MAC, uncured material breach and insolvency appears in nearly every draft. A mutual termination right at the long-stop is standard; some investor drafts give the right to the investor alone, which is worth resisting. A 'no fault' refund within 15 days matches Section 42.
How to negotiate it
Ask for a mutual termination right (as here), an automatic extension of 30 days where the only unsatisfied conditions are regulatory or third-party items being pursued in good faith, and a cure period of at least 10 Business Days before any breach-based termination. Resist a right to terminate for any breach of warranty regardless of materiality, and resist any 'break fee' payable by the company if the deal fails. Make sure the surviving clauses include Clause 23 only in the limited form you negotiated there.
8. Conduct of business before Closing
8.1 From the date of this Agreement until Closing, the Company shall, and the Promoters shall procure that the Company shall, carry on its business in the ordinary course consistent with past practice and in compliance with applicable law, preserve its assets, goodwill and relationships with customers, suppliers and employees, and maintain its insurances. 8.2 Without limiting Clause 8.1, the Company shall not, and the Promoters shall procure that the Company shall not, without the prior written consent of the Investor (not to be unreasonably withheld or delayed, and deemed given if the Investor does not respond within 5 Business Days of a written request): (a) declare or pay any dividend or make any other distribution; (b) incur any indebtedness in excess of ₹50,00,000 in aggregate, other than trade credit in the ordinary course; (c) employ or engage any person on total annual remuneration above ₹30,00,000, or increase the remuneration of any Promoter or key employee; (d) issue, allot, transfer, redeem or buy back any share or security or grant any option, other than under this Agreement and the ESOP 2026; (e) settle or compromise any claim or litigation above ₹10,00,000; (f) enter into, vary or terminate any related party transaction or any contract with a Promoter or an Affiliate of a Promoter; (g) acquire or dispose of any business, or any asset having a value above ₹25,00,000, other than in the ordinary course; (h) amend its Memorandum or Articles other than as contemplated by this Agreement; or (i) agree to do any of the foregoing. 8.3 Nothing in this Clause 8 shall restrict any action required by law or by a Governmental Authority, or any action expressly contemplated by this Agreement or the Business Plan, provided the Company notifies the Investor in writing.
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What it says
Between signing and Closing the company must run as normal and must not do anything that changes what the Investor is buying. The named prohibitions without consent: no dividends, no new borrowing over ₹50 lakh, no hire above ₹30 lakh a year or founder pay rise, no change to the cap table except the deal itself and ESOP grants, no settling claims over ₹10 lakh, no related party deals, no asset sales over ₹25 lakh, no change to the constitution. Consent cannot be unreasonably withheld and is deemed given after five business days of silence.
What it means for you
For four weeks you are running the company with an extra approver. The thresholds decide how painful that is: a ₹30 lakh hiring cap means you can hire developers but not a VP of Sales without an email to Marigold. The deemed consent after 5 Business Days is the clause that keeps the business moving; without it, a slow fund blocks your hiring. These are the SSA's version of the SHA's reserved matters, so read them against the list in the Shareholders' Agreement Explainer: anything the SHA will allow you to do without consent should not be banned here. A breach here is a termination ground under Clause 7.
What is normal
A short list of eight to twelve pre-closing restrictions is normal. Debt thresholds of ₹25 lakh to ₹1 crore and hiring thresholds of ₹25 lakh to ₹50 lakh of annual remuneration are standard at a ₹100 crore post-money. Deemed consent after 3 to 7 business days appears in most negotiated deals but is missing from most first drafts. 'No dividends and no cap table changes' is universal; a bar on ordinary-course asset sales is investor-heavy and should be limited to assets outside the ordinary course.
How to negotiate it
Ask for deemed consent after 5 Business Days (as here) and a 'not unreasonably withheld' standard. Raise the hiring threshold to match your approved hiring plan for the quarter and carve out hires already in the Business Plan. Carve out ESOP grants to new joiners within the pool, and any action already disclosed in the Disclosure Letter. Keep the restrictions limited to the period before Closing; a draft that extends them until the second tranche is paid would run the company under SSA rules for a year alongside the SHA.
9. Closing
9.1 Closing shall take place at the registered office of the Company, or by exchange of electronic documents, on the date falling 5 Business Days after the Investor's confirmation under Clause 6.4, or on such other date as the Investor and the Company agree in writing (the "Closing Date"), which the Parties expect to be 27 November 2026. 9.2 At Closing the following shall occur in the following sequence, and each step shall be deemed to occur simultaneously with and conditional upon the others: (a) the Investor shall have transferred the First Tranche Amount to the Subscription Account not later than 2 Business Days before the Closing Date, and the Company shall produce the bank statement evidencing receipt; (b) the Board shall hold a meeting at which it shall record receipt of the First Tranche Amount, approve the allotment of the First Tranche Shares to the Investor, approve the entry of the Investor's name in the register of members, and instruct the depository participant to credit the First Tranche Shares to the Investor's demat account; (c) the Company shall enter the Investor in the register of members as the holder of 1,40,000 Series A CCPS; (d) the Company, the Promoters, the Existing Investors and the Investor shall execute the Shareholders' Agreement; (e) the Board shall appoint Rohan Kapoor as the Investor Director with effect from Closing; and (f) the Parties shall exchange the Closing Deliverables listed in Schedule 2. 9.3 If any Party fails to comply with any obligation in Clause 9.2, the Investor (in the case of a default by the Company or a Promoter) or the Company (in the case of a default by the Investor) may defer Closing to a date not more than 10 Business Days later, proceed to Closing so far as practicable, or, if the default is not remedied on the deferred date, terminate this Agreement under Clause 7.
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What it says
The choreography of closing day. The money must already be in the separate account two business days before. Then the board meets, records receipt, allots 1,40,000 Series A CCPS to Marigold, writes Marigold into the register of members, instructs the depository participant to credit the shares in demat form and appoints Rohan Kapoor as Investor Director. Everyone signs the SHA, the Schedule 2 deliverables change hands, and every step is treated as happening at once so nobody is exposed halfway through. If a step fails, Closing can be deferred up to 10 business days or the deal terminated.
What it means for you
The sequence matters because the law creates a gap: once the money is in the account the company holds it in trust until allotment, and once the board allots, the Investor owns shares before the demat credit shows. The 'simultaneous and conditional' wording closes that gap contractually. Schedule the board meeting for the morning, with the bank statement, the valuation report and the PAS-5 record on the table. Your company secretary signs the board minutes and the DP instruction; the DIR-12 for Rohan Kapoor then falls due within 30 days, on 27 December 2026, as the deadlines calculator on this page shows.
What is normal
Closing within 3 to 10 Business Days of CP confirmation is standard. Money two business days before Closing is common; some investors insist on same-day transfer against a signed allotment resolution, which creates a timing argument on the day. Electronic closings with scanned signatures and a closing call have been the norm since 2020. A deferral right of 5 to 10 Business Days before a termination right is standard and protects both sides.
How to negotiate it
Ask for a fixed outside date for the money (as in Clause 9.2(a)) so the board meeting is not called on a promise. Ask that the Investor's failure to pay on time is itself a default allowing the company to defer or terminate, as Clause 9.3 does. Resist any requirement to hand over signed share certificates or a signed register before the money is confirmed in the account. Ask for a short closing memorandum signed on the day listing what was delivered, so there is no dispute later about a missing document.
10. Closing deliverables
10.1 At Closing the Company and the Promoters shall deliver to the Investor the documents listed in Part A of Schedule 2, namely: (a) certified copies of the resolutions of the Board and of the shareholders approving the issue and allotment of the Series A CCPS, the restated Articles and the ESOP 2026, with evidence of filing of Form MGT-14 for each special resolution; (b) a copy of the private placement offer letter in Form PAS-4 issued to the Investor and of the record of private placement offers in Form PAS-5; (c) the valuation report under Rule 13 of the Companies (Share Capital and Debentures) Rules 2014; (d) a certified copy of the restated Articles as adopted; (e) an Officer's Certificate signed by the Chief Executive Officer confirming that the Warranties are true and accurate at Closing, that no Material Adverse Change has occurred and that Clause 8 has been complied with; (f) the executed employment, intellectual property assignment and non-compete agreements of each Promoter; (g) written confirmations from the insurer or broker that the key person and D&O insurance proposals have been accepted; (h) a certified extract of the register of members showing the Investor as the holder of the First Tranche Shares; (i) a copy of the instruction to the depository participant for the demat credit; and (j) a legal opinion from the Company's counsel in the agreed form as to the due incorporation of the Company, its capacity, the due authorisation and enforceability of the Transaction Documents and the valid issue of the Series A CCPS. 10.2 At Closing the Investor shall deliver to the Company the documents listed in Part B of Schedule 2, namely evidence of its authority to enter into the Transaction Documents, its KYC documents, its demat account details and a copy of its SEBI registration certificate.
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What it says
The list of papers that cross the table. From the company and founders: certified board and shareholder resolutions with proof of the MGT-14 filings, the PAS-4 offer letter and PAS-5 record, the valuation report, the adopted Articles, an officer's certificate that nothing has gone wrong since signing, the founders' signed employment and IP agreements, insurance confirmations, the register extract, the demat instruction and a legal opinion from the company's counsel. From the Investor: proof of its authority, KYC, its demat account details and its SEBI certificate.
What it means for you
This is a checklist you can start on the day you sign; seven of the ten items can be ready a week before Closing, while the officer's certificate, the register extract and the demat instruction can only be signed on the day. The officer's certificate is the item to read carefully, because it is a fresh warranty signed by the CEO on Closing Day and a false certificate is a personal problem, not a corporate one. The legal opinion is the item that costs money: your counsel will charge ₹1 lakh to ₹3 lakh for it and will want the same evidence file you built for the CP satisfaction notice. The Investor's KYC and demat details are needed for the PAS-3 and the DP instruction, so chase them early.
What is normal
Ten to fifteen company-side deliverables is normal. A legal opinion from the company's counsel appears in roughly half of Series A deals in India, more often with institutional funds. An officer's certificate at Closing is almost universal. Evidence of MGT-14 filing is asked for where the resolution date leaves time for the filing before Closing, as here. Investor-side deliverables are usually three to five items and are often forgotten in first drafts.
How to negotiate it
Ask that the legal opinion is limited to capacity, authority and valid issue, and excludes any opinion on the warranties or on compliance; broader opinions are expensive and unusual. Ask that the officer's certificate is given 'so far as the Promoters are aware' for the business warranties and absolutely only for title, capacity and capitalisation. Make the Investor's deliverables a condition of the company's obligation to allot, so a missing KYC document is the Investor's delay, not yours. Agree the forms of every deliverable as annexes before signing.
11. Second Tranche and the Milestone
11.1 Subject to Clause 11.4, the Investor shall subscribe for the Second Tranche Shares for the Second Tranche Amount of ₹6,00,00,000 within 30 days of receipt of the Auditors' certificate that the Milestone has been achieved (the "Milestone Certificate"), provided that the Milestone is achieved on or before the date falling 12 months after the Closing Date. 11.2 The Company shall deliver the Milestone Certificate within 30 days of the end of the month in which the Milestone is achieved, together with the management accounts and the ARR computation in accordance with Schedule 6, and the Investor may within 10 Business Days raise written queries which the Auditors shall address. 11.3 If annual recurring revenue of at least ₹5,40,00,000 but less than ₹6,00,00,000 is achieved within the period in Clause 11.1 (a "Near Miss"), the Investor shall consider in good faith a request from the Company to waive the shortfall, and may, but need not, waive the Milestone in whole or in part by notice in writing. 11.4 The obligation of the Investor under Clause 11.1 is conditional upon: (a) the Warranties in paragraphs 1, 2 and 13 (insolvency) of Schedule 3 being true at the date of the subscription; (b) where a fresh special resolution is required under paragraph (d), the Company having obtained a valuation report from a registered valuer under Rule 13 supporting a price of not more than ₹1,000 per share, failing which the Investor may elect to subscribe at the price the report supports or not to subscribe, and Clause 11.6 shall apply; (c) the Company having issued a fresh offer letter in Form PAS-4; (d) if the allotment will fall after 19 October 2027, a fresh special resolution having been passed for it; and (e) no insolvency event having occurred. 11.5 The Second Tranche Shares shall be allotted within 60 days of receipt of the Second Tranche Amount, the Company shall file Form PAS-3 within 15 days of allotment, and Clauses 4, 9 and 12 shall apply to the Second Tranche with the necessary changes. 11.6 If the Milestone is not achieved within the period in Clause 11.1 and the Investor does not waive it, the Investor shall have no obligation to subscribe for the Second Tranche Shares, the Company may offer them to other investors at a price not lower than ₹1,000 per share, subject to the Investor's pre-emptive rights under the Shareholders' Agreement, and the Investor's rights under the Shareholders' Agreement shall continue in respect of the First Tranche Shares.
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What it says
The second ₹6 crore arrives within 30 days after the auditors certify that annual recurring revenue has reached ₹6 crore, provided that happens within 12 months of Closing. The company must deliver the certificate with the management accounts, and the Investor may ask questions. If ARR lands between ₹5.4 crore and ₹6 crore the Investor must consider a waiver in good faith but is not bound to give one. The price stays at ₹1,000 and a fresh PAS-4 is needed, plus a fresh special resolution and a fresh valuation report if the allotment falls after 19 October 2027; if that report supports a price above ₹1,000, the Investor may subscribe at that price or walk away. The second tranche follows the same Section 42 mechanics. If the milestone is missed, the Investor keeps its first-tranche rights and the company may raise the ₹6 crore elsewhere at no lower price.
What it means for you
Build the ARR definition in Schedule 6 with your auditors before signing; disputes about tranches are almost always disputes about what counts as recurring revenue. The 12-month window runs from 27 November 2026, so you need ₹6 crore ARR by 27 November 2027 and the certificate soon after. The near-miss band gives you a conversation, not a right, so do not plan cash on it. Clause 11.6 is your protection: a missed milestone does not give Marigold new rights, and you can fill the gap with another investor at the same price, subject to Marigold's pro-rata right. The second allotment needs a second PAS-3, and if it falls after 19 October 2027, Rule 13 also needs a fresh special resolution and a fresh valuation report, all at your cost, so book that EGM early.
What is normal
Where tranches exist, 12 to 18 months for the milestone and payment within 30 to 45 days of the certificate is normal. A near-miss band of 10 to 20 percent below the milestone with a good-faith waiver discussion appears in most negotiated deals; an automatic pro-rata reduction of the tranche is less common. Fixed pricing for the second tranche is the norm. Within 12 months of the special resolution the original Rule 13 report supports that price; a fresh report comes with a fresh resolution. Investor-heavy drafts make the second tranche conditional on all warranties being true and on 'no breach of the SHA', which founders should narrow.
How to negotiate it
Ask for four things. Limit the bring-down for the second tranche to the fundamental warranties and insolvency, as Clause 11.4 does, not every business warranty. Add a near-miss rule with a specific consequence, for example a pro-rata tranche of at least 80 percent if ARR is at least 90 percent of the target. Require the Investor to raise queries once, within 10 Business Days, and treat silence as acceptance of the certificate. Make sure a missed milestone carries no penalty beyond losing the tranche: no ratchet on the first-tranche price, no extra board seat and no change to the liquidation preference.
12. Conditions subsequent
12.1 The Company shall, and the Promoters shall procure that the Company shall, complete each of the following within the period stated (each a "Condition Subsequent"): (a) file the return of allotment in Form PAS-3 with the Registrar within 15 days of the allotment of the First Tranche Shares; (b) file Form MGT-14 within 30 days of each special resolution passed in connection with the Transaction Documents, to the extent not already filed; (c) procure the credit of the First Tranche Shares to the Investor's demat account within 2 months of allotment and deliver the depository statement evidencing the credit; (d) file Form DIR-12 for the appointment of the Investor Director within 30 days of the Closing Date; (e) update the register of members and the register of directors and key managerial personnel; (f) pay the stamp duty on the issue of the Series A CCPS through the depository at the rate prescribed under the Indian Stamp Act 1899; (g) bind the D&O insurance policy of ₹5,00,00,000 and the key person insurance policies within 30 days of the Closing Date; and (h) adopt the policies listed in Schedule 7 (including an anti-bribery policy, a related party transactions policy, a whistle-blower policy and a policy under the Prevention of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013) within 90 days of the Closing Date. 12.2 If the Company fails to complete a Condition Subsequent within the period stated, the Investor shall notify the Company and the Company shall have 15 Business Days from such notice to cure the failure; a failure not cured within that period shall be a breach of this Agreement entitling the Investor to claim under Clause 17, and a failure to complete Condition (a) or (c) shall also entitle the Investor to require the Company to refund the First Tranche Amount with interest at 12 percent per annum in accordance with Section 42(6) of the Companies Act 2013, to the extent permitted by law.
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What it says
The homework after the money arrives, each with a deadline: PAS-3 within 15 days of allotment, MGT-14 within 30 days of each special resolution, the demat credit within 2 months, DIR-12 for the Investor Director within 30 days of Closing, the statutory registers updated, stamp duty paid through the depository, the D&O and key person policies bound within 30 days, and a set of governance policies adopted within 90 days. A missed item gets a notice and 15 business days to fix; after that it is a breach, and a failed PAS-3 or demat credit can trigger a refund claim with 12 percent interest.
What it means for you
Put the dates in your compliance calendar the day you sign: with allotment on 27 November 2026, PAS-3 is due by 12 December 2026, DIR-12 by 27 December 2026, the policies by 25 February 2027 and the demat credit by 27 January 2027. The PAS-3 deadline is also the day you can start spending the money, so file it on day two, not day fifteen. The 15 Business Day cure period is a founders' win; many drafts treat a missed filing as an immediate breach. The refund remedy for a failed PAS-3 mirrors Section 42 and is rarely used, but it is the Investor's lever if the company sits on the filing.
What is normal
Six to ten conditions subsequent is normal. The statutory ones (PAS-3, MGT-14, demat credit, DIR-12) are in every deal because the law fixes them. Insurance within 30 to 60 days and policies within 60 to 120 days are standard. A cure period of 10 to 20 Business Days appears in most negotiated deals. Filing fees for PAS-3 and MGT-14 are a few hundred rupees each for a company of this size; the stamp duty on the issue is ₹7,000 on ₹14 crore at 0.005 percent, collected by the depository.
How to negotiate it
Ask for a cure period (15 Business Days here) and for the remedy to be a claim for actual loss rather than a refund, except where the law itself requires the refund. Ask that any failure caused by a government portal outage or by the Investor's own delay in delivering KYC or demat details extends the period. Limit the policies in Schedule 7 to those the law requires or the Board approves, and give yourself 90 days rather than 60. Ask that the Investor confirms completion of the conditions subsequent in writing, so the file is closed.
Warranties and disclosure
13. Warranties
13.1 The Company and each Promoter jointly and severally warrant to the Investor that each of the Warranties set out in Schedule 3 is true, accurate and not misleading at the date of this Agreement and shall be true, accurate and not misleading at Closing by reference to the facts and circumstances then existing. 13.2 Schedule 3 contains Warranties as to: (1) title and capacity; (2) capitalisation and the cap table in Schedule 5; (3) the Accounts for FY 2024-25 and FY 2025-26 and the management accounts to 30 September 2026; (4) tax; (5) employees and consultants; (6) intellectual property; (7) material contracts; (8) litigation; (9) compliance with law and licences; (10) data protection and information technology; (11) insurance; (12) real property and leases; (13) insolvency; and (14) related party arrangements. 13.3 Each Warranty is a separate and independent statement and, save as expressly provided, shall not be limited by reference to any other Warranty or any other provision of this Agreement. 13.4 The Warranties are given subject to the matters fairly disclosed in the Disclosure Letter and to the limitations in Clauses 17 to 20. 13.5 The Promoters undertake not to make any claim against the Company, or any director, officer or employee of the Company, in respect of any information or advice given to them in connection with the Warranties or the Disclosure Letter, save in the case of fraud. 13.6 Where a Warranty is qualified by the expression "so far as the Promoters are aware" or any similar expression, it shall be deemed to include an additional statement that it has been made after reasonable enquiry of the Company's Chief Financial Officer, company secretary, auditors and heads of department.
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What it says
The founders and the company promise that fourteen groups of statements in Schedule 3 are true today and will still be true at Closing: who owns what, the accounts, tax, people, intellectual property, contracts, litigation, compliance, data protection, insurance, property, solvency and related party dealings. Each statement stands on its own. The promises are limited by what the disclosure letter fairly discloses and by the indemnity limits later in the agreement. Where a warranty is 'so far as the Promoters are aware', it means after asking the finance head, the company secretary, the auditors and the department heads.
What it means for you
Schedule 3 will run to 15 to 25 pages, and every sentence in it is a potential claim against you personally, up to your cap in Clause 17. Read it sentence by sentence with your finance team and ask of each one: is this true, and if not, is it in the disclosure letter? The repetition at Closing means a problem that arises in November must be disclosed before 27 November 2026, under Clause 15. 'Jointly and severally' in Clause 13.1 means Marigold may pursue either founder for the whole claim; the indemnity clause then applies the founder cap and the share-settlement election.
What is normal
Fourteen to twenty-two warranty heads is normal at Series A. Warranties given by the company and the founders together is the Indian norm; founders-only warranties are rare, company-only warranties appear mainly in later rounds with institutional co-investors. Knowledge qualifiers on litigation, compliance, IP infringement and third-party breaches are standard; qualifiers on tax, title and capitalisation are not accepted. A 'separate and independent' rule is universal, and a no-recourse undertaking by the founders against the company's employees appears in most drafts.
How to negotiate it
Ask for knowledge qualifiers on the forward-looking and third-party warranties: infringement of others' IP, compliance by counterparties, threatened litigation. Ask that the warranties on the accounts are limited to 'true and fair' under the accounting standards that apply to the company rather than 'accurate in every respect'. Ask that the disclosure letter and the data room index both qualify the warranties, within the standard in Clause 14. Ask for a materiality threshold inside the contracts and litigation warranties, for example contracts above ₹25 lakh a year and claims above ₹10 lakh, so you are not warranting every purchase order.
14. Disclosure Letter and knowledge
14.1 The Warranties are qualified by the matters fairly disclosed in the Disclosure Letter. A matter is "fairly disclosed" if it is disclosed in the Disclosure Letter with sufficient detail to enable a reasonable investor to identify the nature and scope of the matter disclosed and its likely effect on the Company. 14.2 The general disclosures in Part A of the Disclosure Letter shall qualify the Warranties only to the extent of: (a) the documents listed in the data room index dated 24 October 2026 annexed to the Disclosure Letter, to the extent the relevant matter is apparent from the face of the document; (b) matters appearing in the public records searched on 20 October 2026 and specified in the Disclosure Letter; and (c) the Accounts. 14.3 The specific disclosures in Part B of the Disclosure Letter are made against the Warranty paragraphs identified in Part B, but a disclosure against one Warranty shall be treated as a disclosure against every other Warranty to which it is reasonably apparent that it relates. 14.4 Save as provided in Clause 14.2, no other information of which the Investor or its advisers have knowledge (actual, constructive or imputed) shall prejudice or reduce any claim by the Investor under the Warranties or operate to reduce any amount recoverable, and the Investor shall not be deemed to have waived any claim by reason of any investigation made by or on its behalf. 14.5 The Investor acknowledges that it has not relied on any statement, representation or warranty other than those set out in this Agreement and the Disclosure Letter.
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What it says
This clause sets the rules for how the disclosure letter protects the founders. A matter is fairly disclosed only if it is described with enough detail for a reasonable investor to understand what it is, how big it is and what it means. General disclosures count only for the documents in the indexed data room (where the problem is visible on the face of the document), the public records searched and the accounts. Specific disclosures are made against numbered warranties but spill over to any other warranty they obviously relate to. What the Investor happened to know does not reduce a claim, and the Investor confirms it relied only on the written warranties.
What it means for you
The standard decides whether your disclosure letter is a shield or a decoration. 'Fairly disclosed' with the detail test is the fair middle: you cannot bury a ₹3.2 lakh TDS problem by uploading 400 documents and calling it disclosed, but you also do not have to predict every consequence. Clause 14.2(a) is the compromise on the data room: the index counts, but only where the matter is visible on the face of the document. Clause 14.4 is pro-sandbagging: if Marigold's lawyers spotted a problem you did not disclose, Marigold can still claim. The answer is to disclose it, not to hope they noticed.
What is normal
A 'fairly disclosed' standard with a sufficient-detail test is the Indian market norm; 'fully, fairly and specifically disclosed' is investor-heavy and 'disclosed' alone is founder-heavy. Data room disclosure is accepted in roughly half of Series A deals, almost always limited to an indexed room and often to matters apparent on the face of the document. Pro-sandbagging wording (the investor's knowledge does not reduce a claim) appears in most Indian institutional drafts; an anti-sandbagging clause is a founder win that is rare at Series A. A non-reliance acknowledgement by the investor is standard.
How to negotiate it
Ask for 'fairly disclosed' rather than 'fully and specifically disclosed'. Ask that the indexed data room qualifies the warranties (as Clause 14.2(a) does), and if the Investor resists, agree a list of named documents that are deemed disclosed. Ask that a specific disclosure against one warranty qualifies all related warranties, as Clause 14.3 does. On sandbagging, ask at least that matters the Investor's own diligence report identified in writing before signing are deemed disclosed; a full anti-sandbagging clause is unlikely but the written-report carve-out is often conceded.
15. Repetition at Closing and notification
15.1 The Warranties shall be deemed repeated at Closing by reference to the facts and circumstances then existing, and any reference in a Warranty to the date of this Agreement shall be construed as a reference to the Closing Date (the "Bring-down"). 15.2 The Company and the Promoters shall notify the Investor in writing promptly, and in any event within 3 Business Days, on becoming aware of any fact, matter or event arising after the date of this Agreement which constitutes, or would on the Bring-down constitute, a breach of any Warranty or of Clause 8, giving reasonable particulars. 15.3 The Company and the Promoters may, not later than 3 Business Days before the Closing Date, deliver a Supplementary Disclosure Letter disclosing matters arising after the date of this Agreement which would otherwise constitute a breach of the Warranties on the Bring-down. 15.4 A matter fairly disclosed in a Supplementary Disclosure Letter shall qualify the Warranties as repeated at Closing, but shall not qualify the Warranties as given at the date of this Agreement or prejudice any claim of the Investor in respect of a breach existing at that date. 15.5 If a matter disclosed in a Supplementary Disclosure Letter, alone or together with other matters so disclosed, constitutes a Material Adverse Change or a breach of a Fundamental Warranty, or would reasonably be expected to give rise to Losses exceeding ₹1,00,00,000, the Investor may, by notice in writing within 5 Business Days of receipt, terminate this Agreement under Clause 7.2, failing which the Investor shall proceed to Closing and shall have no claim in respect of the matters so disclosed.
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What it says
The warranties are made twice: at signing and again at Closing, as if the agreement were being signed on 27 November 2026. If something goes wrong in between, the founders must tell the Investor within three business days. They can update the disclosure letter up to three business days before Closing. An update protects the founders against the Closing-day warranties but not against the signing-day ones. If the update reveals a material adverse change, a breach of a fundamental warranty or a likely loss over ₹1 crore, the Investor has five business days to walk away; if it closes anyway, it cannot claim for the matters disclosed.
What it means for you
The bring-down is why the four weeks between signing and Closing are not a holiday: a customer notice, a tax demand or a resigning developer becomes a warranty breach on 27 November 2026 unless you disclose it. Clause 15.3 is your tool; use it. Clause 15.4 means a supplementary letter does not rewrite history: if the problem existed at signing and you missed it, the Investor keeps its claim. Clause 15.5 is the founders' win: once the Investor sees a disclosed matter and still closes, it has accepted the risk. Without that sentence the Investor could close, take the shares and sue on the matter it already knew about.
What is normal
Repetition at Closing is universal in sign-then-close deals. A notification duty with a 2 to 5 business day window is standard. The right to deliver a supplementary disclosure letter appears in most negotiated deals; many investor first drafts omit it or state that supplementary disclosures do not qualify the warranties at all, which leaves the founders exposed for events outside their control. A 'close or terminate, but not both' election for the investor is the fair market position, with a materiality threshold of 0.5 to 1 percent of the round for the walk-away right.
How to negotiate it
Ask for the right to deliver a supplementary disclosure letter (as here). Ask that matters arising from events outside the company's control, such as a change in law or a market-wide event, qualify the warranties at Closing without giving the Investor a termination right. Ask for the 'close or terminate' election in Clause 15.5 so the Investor cannot close and then claim. Ask that the notification duty in Clause 15.2 is 'so far as the Promoters are aware' and that a late notification is not itself a separate breach unless it causes additional loss.
16. Investor warranties
16.1 The Investor warrants to the Company and the Promoters that at the date of this Agreement and at Closing: (a) it is a fund duly constituted as a trust under the Indian Trusts Act 1882 and registered with the Securities and Exchange Board of India as a Category II alternative investment fund under the SEBI (Alternative Investment Funds) Regulations 2012, and Marigold Investment Advisors LLP is duly appointed as its investment manager with authority to bind it; (b) it has the power and authority to enter into and perform this Agreement and the Shareholders' Agreement, and such documents constitute valid and binding obligations on it; (c) it has, and will at Closing and at the date of the Second Tranche have, sufficient committed and callable capital to pay the Investment Amount in full; (d) its execution of the Transaction Documents does not breach its constitutional documents, the terms of its placement memorandum or any law or order binding on it; (e) neither it nor its investment manager nor, so far as it is aware, any of its contributors is a person subject to sanctions administered by the Government of India, the United Nations Security Council or any other authority whose sanctions bind the Investor; (f) it is a person resident in India for the purposes of the Foreign Exchange Management Act 1999; each of its sponsor, manager and investment manager is owned and controlled by resident Indian citizens, or by non-resident Indians or overseas citizens of India on a non-repatriation basis, so that its investment is not indirect foreign investment under Rule 23 and Schedule VIII of the FEMA (Non-debt Instruments) Rules 2019; no beneficial owner of the Investor is situated in, or is a citizen of, a country that shares a land border with India; and the subscription requires no filing under those Rules and no approval under Press Note 3 of 2020; and (g) it is subscribing for the Series A CCPS for its own account and not as a nominee for any other person. 16.2 The Company and the Promoters shall be entitled to rely on the Investor Warranties and the Investor shall indemnify the Company and the Promoters against Losses arising from any breach of them, subject to a cap equal to the Investment Amount.
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What it says
The Investor makes promises too. It is a properly constituted and SEBI-registered Category II AIF, the LLP signing for it has authority, it has the committed capital to pay both tranches, the deal does not breach its own fund documents, nobody behind it is a sanctioned person, it is resident in India, its sponsor and managers are Indian-owned and controlled and no beneficial owner is from a country sharing a land border with India, so FEMA filings and Press Note 3 approval do not apply, and it is buying for itself. The company and the founders may rely on these warranties and are indemnified, up to the ₹20 crore investment amount, if any is wrong.
What it means for you
Investor warranties are short but useful. The committed-capital warranty in Clause 16.1(c) is the one that matters for a tranched deal: a fund near the end of its investment period may not be able to call ₹6 crore in a year, and this warranty gives you a claim if it cannot. The residency and ownership warranty in Clause 16.1(f) is what keeps FEMA out of this deal: because Marigold is a domestic rupee fund whose sponsor and manager are Indian-owned and controlled, there is no FC-GPR, no FEMA pricing floor and no Press Note 3 question. If a foreign fund invests alongside, that investor would warrant its country of beneficial ownership and the Press Note 3 position instead.
What is normal
Four to seven investor warranties is normal; many first drafts contain two (authority and capacity) and founders add the rest. A committed-capital warranty appears in most tranched deals. A sanctions warranty is standard with institutional funds. Residency and Press Note 3 warranties are standard where any investor is or might be non-resident, and for a foreign investor the warranty usually extends to the beneficial owners of the fund. An indemnity from the investor capped at the investment amount is a fair and common position; many drafts give no investor indemnity at all.
How to negotiate it
Ask for a committed-capital warranty covering both tranches (as here) and, if the fund's investment period ends within the next 18 months, a confirmation that the second tranche has been reserved. Ask for a residency and Press Note 3 warranty from any investor whose ownership you cannot see, because a wrong answer makes the company responsible for a FEMA compounding application. Ask that the Investor Warranties are given to the Promoters as well as the Company. Ask for an investor indemnity with a cap, so the obligation is real rather than a bare warranty.
Indemnity and remedies
17. Indemnity
17.1 Subject to the limitations in this Clause 17 and in Clauses 18 to 20, the Company and the Promoters shall jointly and severally indemnify and hold harmless the Investor, its Affiliates and their respective directors, officers and employees (the "Investor Indemnified Persons") from and against all Losses suffered or incurred by any of them arising out of or in connection with any breach of the Warranties or of any covenant or undertaking of the Company or the Promoters in this Agreement. 17.2 The Company and the Promoters shall not be liable for a claim under Clause 17.1 unless: (a) the Losses in respect of that claim, or a series of claims arising from the same or substantially similar facts, exceed ₹5,00,000 (the "De Minimis"); and (b) the aggregate Losses in respect of all claims exceeding the De Minimis exceed ₹25,00,000 (the "Basket"), in which case the Investor may claim the whole of such aggregate Losses and not only the excess. 17.3 The aggregate liability of the Company and the Promoters under this Agreement shall not exceed the Investment Amount actually paid by the Investor at the date of the claim (the "Cap"), and the aggregate liability of each Promoter shall not exceed the lower of 50 percent of the Investment Amount actually paid and the fair market value of the Shares held by that Promoter on the date of the claim. 17.4 Nothing in Clauses 17.2 and 17.3 shall limit liability for fraud or wilful concealment by the person against whom the claim is made. 17.5 No Party shall be liable for any indirect or consequential loss, loss of profit or loss of goodwill, save to the extent that a diminution in the value of the Series A CCPS is treated as a direct loss. 17.6 A Promoter may, at his or her election by notice in writing within 20 Business Days of a claim being agreed or finally determined, satisfy all or part of the claim by transferring to the Investor Equity Shares having a fair market value (determined by the Auditors or an independent valuer appointed by the Board) equal to the amount so satisfied, subject to applicable law including Sections 50CA and 56(2)(x) of the Income-tax Act 1961 (renumbered under the Income-tax Act 2025 from 1 April 2026).
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What it says
If a warranty or a promise turns out to be wrong, the company and the founders compensate the Investor for its losses. Small claims under ₹5 lakh do not count. Nothing is payable until eligible claims together exceed ₹25 lakh, and then the whole amount is payable, not just the excess. Total liability is capped at the money actually paid, and each founder's liability at the lower of half that amount and the value of their own shares. Fraud is uncapped. Indirect losses are excluded. A founder may pay a claim in shares instead of cash.
What it means for you
Run the numbers through the indemnity calculator on this page. With the defaults, four claims of ₹3 lakh, ₹7.5 lakh, ₹18 lakh and ₹4 lakh leave ₹25.5 lakh recoverable, because the two small claims drop out and the rest tip the basket. Your personal exposure as a founder is capped at the lower of ₹7 crore (half of ₹14 crore until the second tranche) and the value of your shares, and you can pay in shares, which keeps your house out of it. 'Jointly and severally' means Marigold may pursue you alone for the company's breach up to your cap; see Clause 21 for how a claim meets the second tranche.
What is normal
De minimis of 0.1 to 0.5 percent of the round (₹2 lakh to ₹10 lakh on ₹20 crore) and a basket of 1 to 2 percent (₹20 lakh to ₹40 lakh) are standard; a tipping basket is more common than a deductible one in India. A cap equal to 100 percent of the investment is the norm at Series A; 50 percent appears where founders have strong leverage, and caps above the investment are rare. A founder cap of 25 to 50 percent of the investment, or the value of their shares, appears in most negotiated deals, and the share-settlement election in perhaps a third. Exclusion of indirect loss is universal; the diminution-in-value carve-back is common.
How to negotiate it
Ask for several rather than joint and several liability for the founders, so each answers only for their own share of a claim; if the Investor insists on joint and several, keep the individual cap and the share-settlement election. Tie the Cap to the amount actually paid, not the full ₹20 crore, until the second tranche arrives. Ask for a tipping basket of at least 1 percent of the round and a de minimis of at least 0.25 percent. Ask that the fair market value for share settlement is determined by an independent valuer and that the Investor bears the Section 56(2)(x) tax consequence of receiving shares below Rule 11UA value, or that the mechanism is adjusted to avoid it.
18. Specific indemnities
18.1 Without prejudice to Clause 17 and notwithstanding any disclosure in the Disclosure Letter, the Company and the Promoters shall jointly and severally indemnify the Investor Indemnified Persons against all Losses arising from the matters set out in Schedule 4 (each a "Specific Indemnity"), namely: (a) any tax, interest, penalty or prosecution arising from the short deduction of tax at source on payments to contractors in FY 2024-25 under Section 194J of the Income-tax Act 1961 (renumbered under the Income-tax Act 2025 from 1 April 2026), in respect of which ₹3,20,000 has since been deposited together with interest under Section 201(1A), to the extent any further amount is demanded; (b) any Loss arising from the objection raised under Section 11 of the Trade Marks Act 1999 to the Company's application for registration of the mark "Saffron Flow" in Class 42, including the cost of rebranding if registration is finally refused; and (c) any Loss arising from any claim by the freelance developer named in Schedule 4 to ownership of, or compensation for, work performed for the Company in 2024 before the execution of the assignment deed dated 10 October 2026. 18.2 The De Minimis and the Basket shall not apply to a claim under a Specific Indemnity. 18.3 The aggregate liability under Clause 18.1(a) shall not exceed ₹25,00,000, under Clause 18.1(b) shall not exceed ₹50,00,000, and under Clause 18.1(c) shall not exceed ₹50,00,000, and such liability shall count towards the Cap. 18.4 A claim under Clause 18.1(a) may be made until the seventh anniversary of the end of FY 2024-25; a claim under Clause 18.1(b) or (c) may be made until the second anniversary of the Closing Date. 18.5 The Company shall use reasonable endeavours to resolve each matter in Schedule 4 and shall keep the Investor informed.
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What it says
Three known problems found in diligence are carved out of the usual rules and indemnified separately: a short TDS deduction on contractor payments in FY 2024-25 (₹3.2 lakh since deposited with interest), the Trade Marks Registry objection to the 'Saffron Flow' application, and a freelance developer whose 2024 work was assigned only on 10 October 2026. Disclosure does not block these claims and the de minimis and basket do not apply, but each has its own cap, ₹25 lakh, ₹50 lakh and ₹50 lakh, which counts towards the overall cap, and its own time limit: 7 years for the tax matter, 2 years for the other two.
What it means for you
Specific indemnities are the price of a disclosed problem: the Investor accepts that you told it, but it wants you to carry the cost anyway. The danger version has no cap and no end date, which turns a ₹3.2 lakh TDS matter into an indefinite liability. Saffron's version caps each at a figure that reflects the realistic exposure. For the TDS matter the exposure is small because the tax and interest are paid; what remains is penalty risk under Section 271C and a possible dispute on whether the contractors supplied technical services (2 percent) or professional services (10 percent). The developer matter is the one to close fast: get the assignment deed registered in your IP file and obtain a receipt for any consideration paid.
What is normal
Two to five specific indemnities is normal where diligence has found something; many Series A deals have none. Specific indemnities usually sit outside the de minimis and basket but inside the overall cap, and each carries its own cap of 1.5 to 3 times the realistic exposure. Tax matters survive 7 years, outlasting the reassessment and TDS default time limits; other matters 2 to 3 years. A specific indemnity with no cap is investor-heavy and should be resisted except for fraud. Resolving the matter before Closing, where possible, is the cheapest outcome and often removes the indemnity entirely.
How to negotiate it
Ask for a cap on each specific indemnity (as here), sized to the realistic loss plus a margin, and for the caps to count towards the overall Cap. Ask for a time limit on each, 7 years for tax and 2 to 3 years for the rest. Ask for conduct of the underlying matter to stay with the company, since you know the facts, with an obligation to consult the Investor on settlements above a threshold. Ask that any specific indemnity falls away once the matter is resolved, for example on registration of the trademark or on a closure order for the TDS proceedings.
19. Claims procedure
19.1 The Investor shall give written notice of any claim under Clauses 17 or 18 to the Company and the Promoters within 60 days of becoming aware of the fact, matter or event giving rise to the claim, specifying in reasonable detail the nature of the claim, the Warranty or provision breached and, so far as practicable, the Investor's good faith estimate of the Losses. Failure to give notice within such period shall not relieve the Company or the Promoters of liability save to the extent that the Losses are increased by the delay. 19.2 Where a claim arises from a claim by a third party (a "Third Party Claim"), the Investor shall procure that the Company gives the Promoters reasonable access to the relevant records and personnel, shall not admit liability or settle the Third Party Claim without the written consent of the Promoters (not to be unreasonably withheld), and the Promoters may, at their cost and by notice within 15 Business Days, assume the conduct of the Third Party Claim in the name of the Company, provided that they keep the Investor informed, do not settle without the Investor's consent (not to be unreasonably withheld) where the settlement would involve an admission by the Company or restrictions on its business, and provide security for costs if reasonably requested. 19.3 The Investor shall take, and shall procure that the Company takes, all reasonable steps to mitigate any Loss. 19.4 The Investor shall not be entitled to recover more than once in respect of the same Loss, whether under this Agreement, the Shareholders' Agreement or otherwise, and any amount recovered by the Company from an insurer or a third party in respect of a matter giving rise to a claim shall be deducted from the Loss. 19.5 Where the Company holds insurance that may respond to a Loss, the Company shall first make and diligently pursue a claim under that insurance before a claim is made against the Promoters, and the period in Clause 20 shall be suspended while the insurance claim is pursued.
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What it says
How a claim is run. The Investor must notify a claim within 60 days of learning of it, with reasonable detail and an estimate; a late notice only matters if the delay increased the loss. For claims by outsiders, the founders can take over the defence at their cost and must be consulted on any settlement, and the Investor cannot settle without them. The Investor must mitigate, cannot recover twice for the same loss, must deduct insurance recoveries, and where the company has insurance that could pay, the insurer is claimed against before the founders are.
What it means for you
These procedural rules are worth more than they look. Conduct of claims lets you defend a tax demand or a customer dispute yourself, rather than watching the Investor's lawyers settle it with your money. The insurance-first rule in Clause 19.5 means a loss the company's own policies cover, such as a customer claim under a professional indemnity or cyber policy, goes to the insurer before it reaches your cap; the D&O and key person covers in Clause 12 rarely respond to warranty losses. No double recovery stops the Investor claiming the same ₹10 lakh under the SSA and again as a diminution in the value of its shares under the SHA. Keep a claims file from the day a notice arrives.
What is normal
A notice period of 30 to 90 days with a 'no prejudice unless the delay increases the loss' saving is standard. Conduct of third-party claims by the warrantors appears in most Indian SSAs; investor drafts often give conduct to the company under the Investor's direction, which is worth changing. Mitigation and no double recovery are universal. An insurance-first rule appears in about half of negotiated deals; investor-heavy drafts allow the Investor to claim against the founders first and leave the insurance recovery to be refunded later.
How to negotiate it
Ask for conduct of third-party claims by the Promoters (as here), with a consent right over settlements that restrict the business. Ask for the insurance-first rule and for the time limit to pause while the insurer is pursued. Ask that a claim notice must give reasonable detail and an estimate, so a one-line 'we reserve our rights' email does not stop the clock. Ask for a 'use it or lose it' rule: a notified claim that is not settled or brought to arbitration within 9 to 12 months of the notice lapses, as Clause 20 provides, accepting that Section 28 of the Indian Contract Act 1872 may limit how far it is enforced.
20. Time limits and treatment of payments
20.1 The Company and the Promoters shall not be liable for a claim under Clause 17 unless written notice of the claim is given in accordance with Clause 19.1: (a) in the case of the Fundamental Warranties, at any time; (b) in the case of the Warranties in paragraph 4 (tax) of Schedule 3, on or before the date falling 7 years after the end of the financial year in which Closing occurs; and (c) in the case of all other Warranties and covenants, on or before the date falling 24 months after the Closing Date (together, the "Survival Periods"). 20.2 A claim notified within the applicable Survival Period shall be deemed withdrawn, and the liability of the Company and the Promoters in respect of it shall cease, unless arbitral proceedings in respect of it have been commenced within 12 months of the date of the notice, save where the claim relates to a Third Party Claim that has not been finally determined, in which case the 12-month period shall run from the date of final determination. 20.3 Any payment made by the Company or a Promoter under Clauses 17 or 18 shall, to the extent permitted by applicable law, be treated as an adjustment to the subscription price paid by the Investor for the Series A CCPS, and the Parties shall file their tax returns consistently with such treatment, provided that no Party gives any warranty as to the tax treatment of such payment. 20.4 Where a payment under Clauses 17 or 18 is subject to deduction of tax at source or to tax in the hands of the Investor, the paying Party shall pay such additional amount as ensures that the Investor receives the net amount it would have received had no such deduction or tax applied, to the extent the Loss itself would not have been taxable.
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What it says
How long the promises last. Fundamental warranties (title, capacity, capitalisation) can be claimed at any time. Tax warranties can be claimed for 7 years after the end of the financial year of Closing, so until 31 March 2034. All other warranties and covenants expire 24 months after Closing, on 27 November 2028. A notified claim dies unless arbitration is started within 12 months of the notice. Payments are treated as a reduction of the price Marigold paid, to the extent the law allows, and are grossed up if tax is deducted from them.
What it means for you
The 24-month business survival period means your personal exposure for most warranties ends on 27 November 2028, just under two years after you get the money. Tax is longer because the Income-tax Department can reopen assessments for several years; the 7-year period is set to outlast the reassessment and TDS default time limits. The 12-month 'bring the arbitration or lose the claim' rule aims to close a notified claim, but Section 28(b) of the Indian Contract Act 1872 may make it void. The price-adjustment treatment in Clause 20.3 records how the parties will report a payment; it does not decide the tax. The Income-tax Act has no specific rule on indemnity receipts, so Marigold can argue that a payment compensating a fall in the value of its CCPS is a capital receipt that reduces its cost, but a tax officer may treat it as income. A payment by the company cannot actually cut the subscription price after allotment, because returning share capital or premium needs a reduction of capital under Section 66 of the Companies Act 2013, and a payment by a founder cannot be a price adjustment at all, since the founder never received the price. That is why the clause says 'to the extent permitted by applicable law' and gives no tax warranty.
What is normal
Survival of 18 to 36 months for business warranties is normal, 24 months being the most common; 7 years for tax; indefinite or 'the longest period permitted by law' for fundamental warranties. A 6 to 12 month period to commence proceedings after a claim notice is standard. The price-adjustment treatment appears in most institutional drafts, always with 'to the extent permitted by law'. Gross-up clauses are common but are usually limited so that the warrantor does not pay tax on a loss that would itself have been deductible.
How to negotiate it
Ask for 18 to 24 months for business warranties, with 24 months as the fallback. Ask that fundamental warranties survive for a fixed period, such as 7 to 10 years, rather than indefinitely. Keep the 12-month rule to bring arbitration after a notice (as here), but give nothing up for a shorter one, since Section 28 of the Indian Contract Act 1872 may make it unenforceable. Ask that the gross-up in Clause 20.4 applies only where the Investor is actually taxed on the payment, and not where the payment is treated as a price adjustment, so you do not pay for a tax that never arises.
21. Set-off
21.1 The Investor shall pay the Second Tranche Amount in full, without set-off, by transfer from its own bank account to the Subscription Account. Any amount agreed in writing by the Company and the Promoters, or finally determined by an arbitral award or a court of competent jurisdiction, to be payable to the Investor under Clauses 17 or 18 shall be paid by the Company or the Promoter concerned to the Investor by separate bank transfer on the same day. 21.2 Where a claim has been notified under Clause 19.1 but has not been agreed or finally determined at the date on which the Second Tranche Amount falls due, the Investor shall pay the Second Tranche Amount in full and shall not be entitled to withhold any part of it, save that the Investor may require that an amount equal to the lesser of the Investor's good faith estimate of the claim and ₹2,00,00,000 be placed in an escrow account with a scheduled commercial bank pending agreement or determination of the claim, with the escrow agent's costs borne equally by the Investor and the Company. 21.3 Save as provided in this Clause 21, all payments under this Agreement shall be made in full without set-off, counterclaim or deduction.
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What it says
If the company or a founder owes the Investor money under the indemnity and the amount has been agreed or finally decided, the Investor pays the second ₹6 crore in full from its own bank account and the company or founder pays the claim by a separate bank transfer the same day. If a claim is merely alleged when the second tranche is due, the Investor must still pay in full, but may ask that up to ₹2 crore of the tranche is parked in escrow until the claim is resolved. Otherwise, everybody pays in full without deductions.
What it means for you
Set-off is the clause founders fight hardest in a tranched deal, with reason: a draft that lets the Investor withhold the second tranche for any claim it 'reasonably believes' it has turns ₹6 crore of your runway into a bargaining chip, and an unproven claim becomes a reason not to pay. Saffron's version allows no set-off at all: an agreed or finally determined amount is paid back separately, which costs you nothing, since the money was owed anyway. The escrow compromise in Clause 21.2 protects the Investor against a founder who disappears while keeping the money moving. Indian law expects share money to arrive by bank transfer from the investor's own account, so Saffron's SSA settles an agreed claim as two payments on the same day rather than a deduction from the tranche; a deduction for a founder's debt would also leave the founder owing the company, which looks like a loan to a director.
What is normal
Set-off against a future tranche appears in most tranched Series A drafts. The negotiated norm is set-off only for agreed or finally determined claims; set-off for 'notified' or 'bona fide' claims survives in investor-heavy deals. An escrow of the disputed amount, capped at 10 to 30 percent of the tranche, is a common middle ground. A general 'no set-off' rule for all other payments is universal. Where no second tranche exists, the set-off clause usually disappears or is limited to dividends and other amounts payable to the Investor.
How to negotiate it
Ask that the tranche is paid in full and that agreed or finally determined claims are paid back by separate bank transfer on the same day, not set off (as here). If the Investor insists on protection for pending claims, offer escrow of the disputed amount capped at a figure (₹2 crore here, one third of the tranche) rather than withholding. Ask that a pending claim cannot delay payment of the undisputed balance of the tranche by a single day.
Other
22. Confidentiality and announcements
22.1 Each Party shall keep confidential the terms of the Transaction Documents, the Disclosure Letter, the contents of the data room and all information received from another Party in connection with the transaction, and shall not disclose them to any person except: (a) to its Affiliates, directors, officers, employees, professional advisers, auditors, financiers and, in the case of the Investor, its contributors and prospective contributors, in each case who need to know and are bound by equivalent obligations; (b) as required by law, a court, a Governmental Authority or the rules of a stock exchange, after consulting the other Parties where lawful; (c) with the prior written consent of the other Parties; or (d) to the extent the information is already in the public domain other than through a breach of this Clause. 22.2 No Party shall make any public announcement or press release concerning the transaction without the prior written consent of the Company and the Investor, save that following Closing the Investor may announce the fact of its investment, the name of the Company and the round size, and may include the Company's name and logo in its portfolio materials, and the Company may announce the round with the Investor's prior approval of the text. 22.3 This Clause 22 shall survive termination of this Agreement for 3 years and, following Closing, shall be superseded by the confidentiality provisions of the Shareholders' Agreement to the extent of any inconsistency.
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What it says
Everyone keeps the deal terms, the disclosure letter and the data room confidential, with the usual exceptions for advisers, financiers, the fund's own investors, legal compulsion and public information. Nobody announces the deal without the company's and the Investor's consent, except that after Closing Marigold may announce that it has invested, name the company and the round size, and use the logo in its portfolio materials, and Saffron may announce the round once Marigold approves the wording. The clause lasts three years after termination and hands over to the SHA's confidentiality clause once the deal closes.
What it means for you
This is a short clause because the SHA takes over at Closing; the point of having it in the SSA is to cover the period before Closing and a deal that falls through. The data room and the disclosure letter are the sensitive items: the letter lists every problem the company has. The Investor's right to disclose to 'prospective contributors' means your financials can appear in a fund's next fundraising deck; ask that it is on an anonymised basis until Closing. The announcement rule protects your customers from learning of the round from a press release before you have told them.
What is normal
A two to four paragraph confidentiality clause with a 2 to 3 year survival is standard in an SSA; the detailed regime lives in the SHA. Investors always keep the right to announce the fact of the investment and to use the logo. A mutual approval right over announcements is normal; a company-only right is rare. Disclosure to limited partners and prospective limited partners is standard for AIFs and is rarely negotiable beyond an anonymisation request before Closing.
How to negotiate it
Ask that the Investor's disclosure to prospective contributors before Closing is anonymised. Ask for a mutual approval right over the first announcement and an agreed form press release as a closing deliverable, so the wording is settled before anyone is tempted to tweet. Ask that the round size may be described as 'Series A' without the valuation unless both sides agree to publish it. Confirm that the clause is superseded by the SHA at Closing, so you do not run two inconsistent confidentiality regimes for three years.
23. Costs and expenses
23.1 The Company shall reimburse the Investor within 10 Business Days after the return of allotment in Form PAS-3 for the First Tranche Shares has been filed, out of the First Tranche Amount and against invoices, for the reasonable and documented fees and expenses of the Investor's legal, financial and tax advisers incurred in connection with the due diligence, negotiation and execution of the Transaction Documents, up to an aggregate of ₹20,00,000 plus applicable goods and services tax (the "Expenses Cap"). 23.2 Save as provided in Clause 23.1, each Party shall bear its own costs and expenses in connection with the Transaction Documents. 23.3 If this Agreement is terminated before Closing under Clause 7 as a result of a breach of this Agreement by the Company or a Promoter, or as a result of the Company or the Promoters withdrawing from the transaction otherwise than in accordance with this Agreement, the Company shall reimburse the Investor's reasonable and documented fees and expenses incurred under Clause 23.1 up to ₹10,00,000, and such reimbursement shall be the Investor's sole remedy in respect of costs. 23.4 If this Agreement is terminated before Closing for any other reason, including the non-satisfaction of a Condition Precedent that is not attributable to a breach by the Company or a Promoter, or a decision of the Investor not to proceed, no Party shall have any liability to any other Party for costs. 23.5 No break fee, termination fee or other payment shall be payable by any Party by reason of the failure of the transaction to complete, save as expressly provided in Clause 23.3. 23.6 Stamp duty on this Agreement, the Shareholders' Agreement and the issue of the Series A CCPS shall be borne by the Company, and the Company shall bear the fees of the Registrar and the depository in connection with the issue.
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What it says
The company pays the Investor's lawyers and accountants up to ₹20 lakh plus GST out of the money, within 10 business days after PAS-3 is filed. Otherwise everyone pays their own costs. If the deal fails because the company or the founders broke the agreement or walked away, the company reimburses the Investor's costs up to ₹10 lakh, and that is the Investor's only remedy for costs. If the deal fails for any other reason, including a condition that could not be met through nobody's fault or the Investor changing its mind, nobody pays anybody. There is no break fee. The company pays the stamp duty and the filing fees.
What it means for you
The ₹20 lakh comes off the ₹14 crore, so your usable first tranche is ₹13.8 crore, and GST on legal fees is 18 percent, so budget ₹23.6 lakh if the cap is fully used. The payment waits for PAS-3 because Section 42 bars any use of the money before then. The failed-deal clause is the one to read: Saffron's version limits reimbursement to a breach or a walk-away by the company, capped at ₹10 lakh. The investor-heavy version makes the company pay the full costs whenever the deal fails 'for reasons attributable to the Company', which a creative lawyer can stretch to a slow valuer. Clause 23.5 kills any break fee, which is right: the Investor is not paying one either.
What is normal
Investor expense caps of ₹15 lakh to ₹30 lakh are normal for a ₹20 crore Series A, with GST on top. Payment from the proceeds is standard, timed after the PAS-3 filing because the money cannot be used before it. Reimbursement on a failed deal appears in about half of first drafts and is usually narrowed to a breach or withdrawal by the company, capped at 25 to 50 percent of the expenses cap. Break fees are rare in Indian venture deals; they appear in competitive late-stage processes, not at Series A. The company bearing stamp duty and filing fees is universal because the law imposes them on the issuer.
How to negotiate it
Ask for the cap to be inclusive of GST, or at least to be stated with GST so there is no surprise. Ask for reimbursement on a failed deal only where the company breached or walked away, capped at half the expenses cap (as here), and never where a condition failed without fault or the Investor declined to proceed. Delete any break fee. Ask that the Investor's costs are invoiced to the company so the GST input credit is available to the company, since it is the one paying.
24. Assignment
24.1 No Party shall assign, transfer, charge or otherwise deal with any of its rights or obligations under this Agreement, or grant any trust over or sub-contract any of them, without the prior written consent of the other Parties, and any purported assignment in breach of this Clause shall be void. 24.2 Notwithstanding Clause 24.1, the Investor may, without the consent of any other Party, assign the benefit of this Agreement, in whole or in part, to: (a) an Affiliate of the Investor, including any fund managed or advised by Marigold Investment Advisors LLP or its Affiliates; or (b) a person to whom it transfers Series A CCPS in accordance with the Shareholders' Agreement, provided in each case that the assignee enters into a deed of adherence to this Agreement, the assignor gives the Company written notice of the assignment within 10 Business Days, and the aggregate liability of the Company and the Promoters to the Investor and all assignees shall not exceed the liability that would have applied had no assignment occurred. 24.3 An assignee under Clause 24.2 that is not a person resident in India shall, before the assignment takes effect, confirm to the Company that the assignment complies with the FEMA (Non-debt Instruments) Rules 2019 and that any required pricing, reporting and approval requirements, including under Press Note 3 of 2020, have been or will be satisfied at the assignee's cost. 24.4 This Agreement shall be binding on and enure for the benefit of the Parties and their respective successors and permitted assigns.
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What it says
Nobody can hand their rights or obligations under the agreement to someone else without consent, except the Investor, which may pass the benefit to an affiliated fund or to anyone it sells its shares to under the SHA. An assignee must sign up to the agreement, the company must be told within ten business days, and the total liability of the company and the founders cannot grow because the rights are now spread across several holders. A non-resident assignee must confirm the FEMA position, including Press Note 3, before the assignment works.
What it means for you
The Investor's assignment right is what lets Marigold move the shares to a successor fund or sell to a secondary buyer and hand over the warranty claims with them. The founders' protection is the no-increase-in-liability rule: three assignees cannot each claim the cap. The FEMA confirmation in Clause 24.3 matters because today's deal is a domestic one; if Marigold later sells to a foreign fund, the FC-TRS filing, the pricing floor and the Press Note 3 question arrive with the buyer, and this clause makes the buyer carry them. The company and the founders cannot assign at all, which is normal.
What is normal
A no-assignment rule with a carve-out for the investor's affiliates and transferees is in nearly every Indian SSA. A deed of adherence requirement and a no-increase-in-liability proviso appear in most negotiated drafts. A FEMA confirmation from a non-resident assignee appears in about half of domestic deals and is worth adding in all of them. Assignment rights for the company are rare and unnecessary; the company's obligations cannot sensibly be performed by anyone else.
How to negotiate it
Ask for the no-increase-in-liability proviso (as here) and for notice of any assignment within 10 Business Days. Ask that an assignee that is a competitor of the company, as defined in the SHA, needs the Board's consent even if it is otherwise a permitted transferee. Ask for the FEMA confirmation from non-resident assignees at their cost. Ask that the warranties cannot be assigned separately from the shares, so a claim always sits with a shareholder you can see on the register.
25. Governing law and dispute resolution
25.1 This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with the laws of India. 25.2 Any dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity, interpretation, performance, breach or termination (a "Dispute"), shall first be referred by written notice to the Chief Executive Officer of the Company and a partner of Marigold Investment Advisors LLP, who shall attempt in good faith to resolve the Dispute within 30 days of the notice. 25.3 Any Dispute not resolved within such 30-day period shall be referred to and finally resolved by arbitration under the Arbitration and Conciliation Act 1996 before a sole arbitrator appointed by agreement of the Parties within 15 days of a request, failing which by the Mumbai Centre for International Arbitration in accordance with its rules. 25.4 The seat and venue of the arbitration shall be Bengaluru, the language shall be English, and the award shall be final and binding on the Parties. 25.5 Nothing in this Clause 25 shall prevent any Party from seeking urgent interim or conservatory relief from a court of competent jurisdiction under Section 9 of the Arbitration and Conciliation Act 1996 or from the arbitral tribunal under Section 17 of that Act, and the courts at Bengaluru shall have exclusive jurisdiction for that purpose and for any application in relation to the arbitration. 25.6 Disputes under this Agreement and the Shareholders' Agreement arising from the same facts may be consolidated into a single arbitration at the request of any Party.
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What it says
Indian law governs. A dispute goes first to a 30-day conversation between Saffron's CEO and a Marigold partner. If that fails, a sole arbitrator decides, chosen by agreement within 15 days or, failing that, appointed by the Mumbai Centre for International Arbitration under its rules. The arbitration sits in Bengaluru, in English, and the award is final. Either side can still go to the Bengaluru courts for urgent protective orders under Section 9, or to the tribunal under Section 17. Disputes under the SSA and the SHA about the same facts can be heard together.
What it means for you
Arbitration in Bengaluru with a sole arbitrator keeps a dispute private and relatively quick, 12 to 18 months rather than the years a court case can take. The 30-day negotiation step is cheap and settles most warranty disputes, so use it. The seat being Bengaluru means the courts there supervise the arbitration: a challenge to the award goes to the Commercial Court in Bengaluru, with an appeal to the Karnataka High Court, which is convenient for a Bengaluru company. Section 9 relief is what the Investor would use to stop you spending the money or issuing shares in breach, so expect it to be preserved; it works for you too if the Investor withholds a tranche. Consolidation stops you fighting the same facts twice.
What is normal
Indian law, a 30-day negotiation period, a sole arbitrator and an institutional fallback (MCIA or the Delhi International Arbitration Centre) with the seat in the company's city is the market standard for domestic deals. Three arbitrators appear in deals above ₹100 crore or with foreign investors, where Singapore is the common seat. Preservation of Section 9 relief is universal. Consolidation clauses appear in most negotiated multi-document deals.
How to negotiate it
Ask for the seat in your company's city (as here) and a sole arbitrator; three arbitrators triple the cost. Ask for an institutional appointment fallback with a named institution so a dispute cannot stall on choosing the arbitrator. Ask for the consolidation clause so the SSA, the SHA and any founder agreement are decided together. Ask that costs follow the event, so a party that brings a weak warranty claim pays the other side's costs, which deters tactical claims.
26. Miscellaneous
26.1 This Agreement, the Disclosure Letter, the Shareholders' Agreement and the Articles constitute the entire agreement between the Parties in relation to the subscription and supersede the term sheet accepted on 15 September 2026 and all prior discussions, provided that nothing in this Clause limits liability for fraud. 26.2 No amendment of this Agreement shall be effective unless in writing and signed by or on behalf of each Party, and no waiver shall be effective unless in writing; no failure or delay in exercising a right shall operate as a waiver of it. 26.3 Notices shall be in writing in English and delivered by hand, registered post or email to the addresses in Schedule 8, and shall be deemed received on delivery if by hand, on the third Business Day after posting if by registered post, and on the Business Day after transmission if by email without a notice of failed delivery. 26.4 This Agreement may be executed in any number of counterparts, each of which is an original, and may be executed by electronic signature, including a digital signature certificate issued under the Information Technology Act 2000 or an Aadhaar-based e-sign, and the Parties agree that such execution shall be as valid as execution by hand. 26.5 The Company shall pay the stamp duty on this Agreement in accordance with the Karnataka Stamp Act 1957 and shall bear the stamp duty on any counterpart. 26.6 If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall continue in full force and the Parties shall negotiate in good faith a valid provision having the closest possible effect. 26.7 Each Party shall, at its own cost, execute such documents and do such things as another Party may reasonably require to give full effect to this Agreement, including the filing of forms with the Registrar and the depository. 26.8 In the event of any inconsistency between this Agreement and the Articles, the Parties shall exercise their rights so as to give effect to this Agreement and shall procure that the Articles are amended accordingly.
Click for the notes: what it says, what it means for you, what is normal, how to negotiate it
What it says
The boilerplate, each paragraph with a job. The SSA, the disclosure letter, the SHA and the Articles together are the whole deal, and the term sheet is dead. Changes and waivers must be in writing and signed. Notices go by hand, registered post or email, with deemed receipt rules. The agreement can be signed in counterparts and electronically, by DSC or Aadhaar e-sign. The company pays the Karnataka stamp duty. A bad clause is cut out without killing the rest. Everyone must do the paperwork needed to give effect to the deal, and if the Articles conflict with the agreement, the Articles get amended.
What it means for you
Three paragraphs deserve a founder's attention. The entire agreement clause means any promise made in a September email about, say, a board seat for a future round is gone unless it is in these four documents, so check them against the term sheet before signing. Electronic signature is valid under Section 5 of the Information Technology Act 2000, and most Series A closings now use DSCs or an e-sign platform; but stamp duty is still payable, in Karnataka at a nominal rate for an agreement of this kind, and an unstamped agreement cannot be relied on in arbitration until the duty and penalty are paid. The further assurance clause is what the Investor uses to make you file the PAS-3 if you drag your feet.
What is normal
Entire agreement, written amendments, notices, counterparts, severability and further assurance appear in every SSA. An electronic signature paragraph has been standard since 2020. The company bearing stamp duty on the agreement is universal; the amount is nominal in Karnataka for an agreement not otherwise specifically charged, typically a few hundred rupees under Article 5(j) of the Karnataka Stamp Act 1957, but in Maharashtra Article 5(h)(A)(iv) of the Maharashtra Stamp Act 1958 charges 0.2 percent of the amount agreed on agreements creating rights worth more than ₹10 lakh, which a stamp officer could apply to an SSA, and some other States also charge ad valorem on agreements that create rights in shares, so check locally. An inconsistency clause pointing to the Articles is standard and mirrors the SHA.
How to negotiate it
Ask that the entire agreement clause carries the fraud carve-out (as here), because without it a fraudulent statement in diligence could be excluded from the deal. Ask that the e-signature paragraph names the method, so a closing is not delayed by an argument about whether a particular platform counts. Ask that the notices clause lists email for both sides and treats a read-receipt or a reply as delivery, so a missed registered letter does not start a termination clock. Ask that the further assurance clause is 'at the requesting Party's cost' for anything beyond the statutory filings.
