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Investor due diligence checklist for Indian MSMEs
The documents and answers an angel, a fund or a strategic investor looks for in an Indian company, area by area, and the filings that follow the round.
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When diligence starts
Diligence usually starts after the term sheet is signed. Angels may do a light version; institutional funds use lawyers and a CA firm and go line by line. Either way the questions come from the same list, and the depth depends on the size of the cheque.
Company records
- Certificate of incorporation, MOA and AOA, and any changes to them.
- Statutory registers: members, directors and key managerial personnel, charges, share transfers.
- Board and shareholder minutes, especially for share issues, borrowings and related-party transactions.
- Annual filings with the ROC: financial statements (AOC-4) and the annual return (MGT-7), for every year.
- Director KYC and appointment filings, and resolutions filed with the ROC (MGT-14) where required.
Share capital and cap table
This is where investors look hardest.
- Every allotment, with the board and shareholder approvals, the return of allotment (PAS-3), valuation where required, and share certificates issued.
- Every transfer, with the transfer deed (SH-4), stamp duty paid, and the register updated.
- Convertible instruments (CCPS, CCDs, notes) with their terms, and how they convert.
- ESOP scheme, approvals and grants.
- A cap table that matches the register of members and the annual return. When the spreadsheet and MGT-7 disagree, investors notice.
Financials and tax
- Audited financial statements for the last three years (or since incorporation), and current management accounts.
- Income tax returns, tax audit reports where the tax audit applies, and TDS returns.
- Reconciliations of income with Form 26AS and the Annual Information Statement.
- Any notices, assessments, demands or appeals.
GST
- Registration certificates for every state you are registered in.
- Returns (GSTR-1, GSTR-3B, and annual returns), with the reconciliation of sales and input tax credit across them and against GSTR-2B.
- Any notices or demands.
Contracts and customers
- Top customer and supplier contracts, with any exclusivity, change-of-control or termination rights.
- Leases and property documents.
- Loan agreements and the charges registered for them.
People
- Appointment letters and key employee agreements, including confidentiality and IP assignment.
- PF and ESI registrations and proof of timely deposits, once you cross the thresholds.
- A PoSH Internal Committee if you have ten or more employees.
Intellectual property
- Trademark registrations or applications in the company's name.
- Assignments from founders, employees and contractors for code, designs and content they created. IP that still sits with a founder is a common finding.
Licences and regulatory
- Registrations your business needs (Udyam, shop and establishment, FSSAI, factory, pollution consent, fire NOC, sector licences), and that none has lapsed.
Litigation
- Any pending or threatened cases, notices, and consumer complaints, with their status.
If the investor is foreign
Foreign investment brings FEMA reporting. After issuing shares to a non-resident, the company reports the allotment to the RBI on form FC-GPR, within 30 days of the allotment. Transfers between residents and non-residents are reported on FC-TRS. Pricing has to follow the valuation rules for foreign investment. Investors check that earlier foreign rounds were reported on time.
After the round
Closing is not the end of the paperwork. Expect: the allotment and its PAS-3, share certificates, updates to the registers, MGT-14 for any special resolutions, FEMA reporting for foreign money, and any conditions subsequent from the agreements. Your CS usually runs this list.
See how due diligence works in India for the stages end to end.
Official sources
The rules this guide describes come from these. Check the current text there, or ask your CA or CS.
- Ministry of Corporate Affairs: company filings, charges and the Companies Act 2013
- Income Tax Department: the Income-tax Act 2025 and returns
- GST portal: registrations, returns and GSTR-9C
- EPFO and ESIC: provident fund and employees' state insurance
- Reserve Bank of India: FEMA rules on foreign investment, and MSME lending
- FIRMS portal: FC-GPR and FC-TRS reporting
- IBBI: registered valuers
This guide explains how things usually work. Your CA, CS or lawyer advises on your company’s case. To see which of these documents apply to your company, run the free due diligence readiness check; for a form or term you do not recognise, see the glossary.