Capital Infusion certificate by CA
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What is Capital Infusion?
Capital infusion refers to the process of injecting additional funds into a business. This capital can come from various sources, including investors, shareholders, or financial institutions, and is used to improve the company’s financial health, support its growth, and enhance its operational capabilities. The infusion of capital is critical for businesses at different stages, whether they are start-ups seeking to scale, established companies aiming to expand, or distressed firms needing to stabilize their finances.
What is Capital Infusion Certificate?
A capital infusion certificate is a formal document that confirms the receipt of funds injected into a business by its investors, shareholders, or lending institutions. This infusion of capital is generally undertaken to enhance the company’s financial foundation, support growth initiatives, or improve liquidity. The certificate outlines key details such as the amount infused, the source of funds, and the date of the transaction, serving as crucial evidence for regulatory, legal, and financial reporting purposes. It not only validates the increase in the company’s capital but also reflects investor confidence and can be instrumental during audits, funding rounds, or compliance checks.
Where is Capital Infusion Certificate by CA required?
Here are common situations where a Capital Infusion Certificate by CA is required:
Bank Loan Applications – To prove promoters’ contribution or capital strength.
Startup Registration or Funding – Required by investors or authorities to verify capital received.
Private Placement of Shares – As proof of receipt of share application money.
Compliance with FEMA Regulations – For foreign capital infusion into Indian companies.
Income Tax Assessments – To validate sources of funds during scrutiny.
Company Incorporation or Change in Capital Structure – When infusing fresh capital.
Regulatory Filings with ROC or SEBI – As part of documentation for capital-related filings.
MSME or Startup India Scheme Applications – To demonstrate promoter investment.
NBFC Licensing or Compliance – To confirm capital adequacy.
Internal Audit or Statutory Audit Support – For audit trail of capital transactions.
Who can issue Capital Infusion certificate?
A Capital Infusion Certificate is typically issued by a Chartered Accountant (CA). This certificate serves as documented proof that a business entity has received capital—either in the form of equity or debt—from its promoters, shareholders, or investors. The CA verifies the source and amount of funds infused and certifies the same based on the company’s financial records, bank statements, and relevant documentation. Such certificates are often required for regulatory compliance, funding, or loan purposes.
How to get Capital Infusion certificate by CA online?
Here’s the step-by-step guide:
- Submit Documents: Provide us with necessary documents like bank statements, Provisional financial statements, Account ledger of Fund contributor for the relevant period.
- Verification Process: CA will carefully verify the details you submitted.
- Draft issued: Draft of certificate is sent for confirmation
- Final Certificate Issuance: We will issue the final CA signed and stamped Capital Infusion Certificate with UDIN.
Types of Capital Infusion Certificates
1. Equity Capital Infusion Certificate
- Definition: This certificate is issued when a company receives funds from investors in exchange for equity shares.
- Purpose: It serves as proof that the investor has provided a certain amount of capital and now holds a specific percentage of ownership in the company.
- Key Features:
- Details of the investment amount.
- Number of shares issued.
- Percentage of ownership granted to the investor.
- Terms and conditions related to the equity investment.
2. Debt Capital Infusion Certificate
- Definition: This certificate is issued when a company receives funds in the form of loans or bonds that must be repaid with interest.
- Purpose: It serves as a record of the debt agreement between the lender and the borrower.
- Key Features:
- Principal amount of the loan.
- Interest rate and repayment schedule.
- Collateral (if any) securing the loan.
- Terms and conditions of the debt agreement.
3. Convertible Debt Infusion Certificate
- Definition: This certificate is issued when a company receives funds through a convertible debt instrument, which can be converted into equity under certain conditions.
- Purpose: It provides documentation of the convertible debt arrangement and the potential for conversion into equity.
- Key Features:
- Principal amount and interest rate.
- Conversion terms (e.g., conversion rate, conditions for conversion).
- Maturity date and repayment terms if not converted.
- Rights and privileges of the debt holders.
4. Government Grant Infusion Certificate
- Definition: This certificate is issued when a company receives non-repayable funds from government bodies or agencies.
- Purpose: It serves as proof that the company has been granted a specific amount of capital for certain initiatives or projects.
- Key Features:
- Amount of the grant.
- Purpose and conditions for using the grant.
- Reporting and compliance requirements.
- Duration of the grant support.
5. Venture Capital Infusion Certificate
- Definition: This certificate is issued when a start-up or early-stage company receives funds from venture capitalists in exchange for equity.
- Purpose: It serves as documentation of the venture capital investment and the terms agreed upon.
- Key Features:
- Investment amount.
- Equity stake acquired by the venture capitalists.
- Conditions for additional funding rounds.
- Exit strategy terms for the investors.
6. Angel Investment Infusion Certificate
- Definition: This certificate is issued when a business receives funds from angel investors, typically in the early stages of development.
- Purpose: It records the angel investment and the corresponding equity or convertible debt terms.
- Key Features:
- Amount of investment.
- Equity percentage or convertible debt terms.
- Rights and privileges of the angel investors.
- Milestones and performance conditions.
7. Crowdfunding Infusion Certificate
- Definition: This certificate is issued when a company raises capital through crowdfunding platforms, either as equity or reward-based funding.
- Purpose: It serves as proof of the capital raised from multiple investors or backers.
- Key Features:
- Total amount raised.
- Type of crowdfunding (equity, reward-based).
- Equity shares or rewards granted to backers.
- Terms and conditions related to the crowdfunding campaign.
8. Private Equity Infusion Certificate
- Definition: This certificate is issued when a company receives large-scale investments from private equity firms.
- Purpose: It documents the private equity investment and the resulting equity ownership.
- Key Features:
- Investment amount.
- Equity stake acquired by the private equity firm.
- Governance and management rights.
- Exit strategy and return expectations.
Contents of Capital Infusion Certificate by CA
The contents and format of a Capital Infusion Certificate by CA vary based on the specific requirements and the purpose for which the certificate is issued. A basic Capital Infusion Certificate for any purpose will typically include the following details:
- Title – “Capital Infusion Certificate”
- Name and Address of the Company
- Corporate Identification Number (CIN)
- PAN of the Company
- Date(s) of Capital Infusion
- Amount of Capital Infused
- Name(s) of Person(s) or Entity(ies) Infusing Capital
- Mode of Infusion (e.g., cheque, NEFT, RTGS, cash, etc.)
- Bank Account Details Showing Receipt of Funds
- Purpose of Infusion (e.g., working capital, investment, business expansion)
- Declaration by CA on Verification of Documents (such as bank statements, board resolutions, etc.)
- Confirmation of Compliance with Applicable Laws (e.g., Companies Act, FEMA, Income Tax Act)
- Details of the Chartered Accountant
- Name
- Membership Number
- Firm Registration Number (if applicable)
- UDIN (Unique Document Identification Number)
- Place and Date of Issue
- Signature and Seal of the Chartered Accountant
Capital Infusion certificate format
(On the letterhead of the Chartered Accountant firm)
CAPITAL INFUSION CERTIFICATE
This is to certify that the following capital has been infused into [Company Name], a company incorporated under the Companies Act, 2013, having its registered office at [Registered Office Address], as per the details mentioned below:
Details of Capital Infusion
Name of the Investor: [Full Name of Investor / Entity]
Address of the Investor: [Complete Address]
Date of Receipt of Funds: [DD/MM/YYYY]
Mode of Payment: [e.g., Bank Transfer / Cheque / Demand Draft]
Bank Transaction Reference No.: [Reference No.]
Amount Received (INR): ₹ [Amount in Numbers] (Rupees [Amount in Words])
Purpose of Infusion: [e.g., Subscription to Equity Shares / Compulsory Convertible Debentures / Loan Conversion / Others]
Securities Allotted (if applicable):
Type: [Equity Shares / CCDs / Preference Shares]
Number of Securities: [Quantity]
Face Value per Security: ₹ [Amount]
Issue Price per Security: ₹ [Amount]
Total Value: ₹ [Total Amount]
We confirm that the above capital has been duly received and credited to the company’s bank account maintained with [Bank Name], [Branch], on [Date of Receipt].
This certificate is being issued at the request of the investor for their record and reference.
For A R Dhorajiya & Co.
Chartered Accountants
Firm Registration No. XXXXXX
[Sign of CA with stamp]
CA Arjun Dhorajiya
(Proprietor/Partner)
Membership No. XXXXXX
UDIN: XXXXXXXXXXXXX
Place:
Date:
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Frequently Asked Questions
You can obtain services from any qualified Chartered Accountant (CA) like us who is a member of ICAI for your specific needs.
Yes, UDIN is mandatory for all CA Certificates, according to the Q28 of FAQ on UDIN released by ICAI.
Every certificate we provide comes with a unique ID – the UDIN (Unique Document Identification Number). You can effortlessly check its authenticity online at https://udin.icai.org/search-udin.
A Capital Infusion Certificate is a document issued by a company or promoter confirming that funds have been injected into the business as capital. Banks require this certificate as proof of capital investment before sanctioning loans or credit facilities. It helps the bank verify the financial strength and commitment of the promoters towards the business.
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