transfer-pricing-foreign-trade

At VSJC, we offer extensive valuation services to meet transfer pricing regulations and related laws. Our valuations are accurate, compliant and support transparent financial reporting.

Under the Companies Act 2013, we value shares for non-cash consideration (Section 39), sweat equity shares and intellectual property (Section 54), share issues (Section 62), employee share pricing (Section 67), bond security (Section 73) and non-cash director transactions (Section 192).

We also provide valuations for undervalued transactions under the Insolvency & Bankruptcy Code 2016 (Section 46).

Under the Income Tax Act 1961, we conduct valuations for arm’s length pricing (Sections 92 and 93), slump sales (Section 50B) and specified securities (Sections 115WC and 115WD).

For SEBI regulations, we provide quarterly valuations, NAV disclosures, offer price determinations (Regulation 8), preferential issues (Regulation 163) and pricing of infrequently traded shares.

VSJC ensures all valuations meet the highest standards of accuracy, fairness, and regulatory compliance, supporting clients in making informed and equitable financial decisions.

Transfer Pricing, Foreign Trade

Section 39 of the Companies Act 2013, read with Rule 12(5) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, outlines the specific requirements for the valuation of shares when they are issued for consideration other than cash. Accurate valuation is essential to ensure transparency, fairness and compliance with regulatory standards during these transactions.

Key Aspects of Valuation under Section 39 and Rule 12(5):

  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of shares issued for consideration other than cash. This ensures that the transaction is conducted at a fair and equitable price, reflecting the true value of the consideration received.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the shares. Common methodologies include:
    • Market Approach: Using the prevailing market price of the company’s shares if they are listed on a recognized stock exchange.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the company.
    • Net Asset Value (NAV) Approach: Calculating the value of the company’s assets minus its liabilities.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the shares issued for consideration other than cash.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 39 and Rule 12(5). The report must be submitted to the Registrar of Companies (RoC) as part of the issue documentation.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the issue of shares for consideration other than cash is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 39 read with Rule 12(5) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, ensuring that all share issuances are conducted with accuracy and transparency.

Section 54 of the Companies Act 2013, read with Rules 8(6) and 8(7) of the Companies (Share Capital and Debentures) Rules, 2014, outlines the specific requirements for the issuance of sweat equity shares. Accurate valuation is essential to ensure transparency, fairness, and compliance with regulatory standards during these transactions.

Key Aspects of Valuation under Section 54 and Rules 8(6) and 8(7):

  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of sweat equity shares being issued to employees or directors in exchange for their services or know-how. This ensures that the transaction is conducted at a fair and equitable price, reflecting the true value of the consideration received.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Requirements:
    • under Rule 8(6): Fair Price Justification: When sweat equity shares are issued, the company must justify the fair price of these shares. The valuation must take into account various factors, including market conditions, the company’s financial performance, and the contribution made by the employees or directors receiving the shares.
    • under Rule 8(7): Valuation of Intellectual Property (IP) and Know-How: If sweat equity shares are being issued in consideration for the acquisition of intellectual property rights, know-how, or any other intangible asset, the valuation must also include the fair value of these assets. This ensures that the company accurately reflects the value of the IP or know-how being acquired through the issuance of sweat equity shares.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the sweat equity shares, as well as any IP or know-how being acquired.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 54 and Rules 8(6) and 8(7). The report must be submitted to the Registrar of Companies (RoC) as part of the share issuance documentation.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the issuance of sweat equity shares is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 54 read with Rule 8(6) and Rule 8(7) of the Companies (Share Capital and Debentures) Rules, 2014, ensuring that all sweat equity issuances are conducted with accuracy and transparency.

Section 62(1)(c) of the Companies Act 2013, read with Rule 13(1) of the Companies (Share Capital and Debentures) Rules, 2014, outlines the specific requirements for the valuation of shares when a company proposes to issue shares to any persons other than existing shareholders, through preferential allotment. Accurate valuation is crucial to ensure transparency, fairness, and compliance with regulatory standards during these transactions.

Key Aspects of Valuation under Section 62(1)(c) and Rule 13(1):

  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of shares issued on a preferential basis to persons other than the existing shareholders. This ensures that the shares are issued at a fair and equitable price.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the shares. Common methodologies include:
    • Market Approach: Using the prevailing market price of the company’s shares if they are listed on a recognized stock exchange.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the company.
    • Net Asset Value (NAV) Approach: Calculating the value of the company’s assets minus its liabilities.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the shares to be issued.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 62(1)(c) and Rule 13(1). The report must be submitted to the Registrar of Companies (RoC) as part of the share issuance documentation.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the issuance of shares on a preferential basis is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 62(1)(c) read with Rule 13(1) of the Companies (Share Capital and Debentures) Rules, 2014, ensuring that all preferential share issuances are conducted with accuracy and transparency.

Section 67(3) of the Companies Act 2013, read with Rule 16(1)(c) of the Companies (Share Capital and Debentures) Rules, 2014, outlines the specific requirements for the valuation of shares when an unlisted company issues shares to its employees or to a trust for the benefit of its employees under a scheme. Accurate valuation is essential to ensure transparency, fairness, and compliance with regulatory standards during these transactions.

Key Aspects of Valuation under Section 67(3) and Rule 16(1)(c):

  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of shares issued by an unlisted company to its employees or to a trust for the benefit of employees. This ensures that the shares are issued at a fair and equitable price.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the shares. Common methodologies include:
    • Market Approach: Using the prevailing market price of the company’s shares if they are listed on a recognized stock exchange.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the company.
    • Net Asset Value (NAV) Approach: Calculating the value of the company’s assets minus its liabilities.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the shares to be issued.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 67(3) and Rule 16(1)(c). The report must be included in the records of the company and made available to the regulatory authorities if required.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the issuance of shares to employees or trusts is fair to all stakeholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 67(3) read with Rule 16(1)(c) of the Companies (Share Capital and Debentures) Rules, 2014, ensuring that all employee share issuances are conducted with accuracy and transparency.

Section 73 of the Companies Act 2013, read with Rule 2(ix) of the Companies (Acceptance of Deposits) Rules, 2014, outlines the specific requirements for the valuation of assets provided as security when a company accepts deposits e.g. issue of secured bonds / debentures. Accurate valuation is crucial to ensure that the assets provided as security are fairly valued, protecting the interests of the depositors and ensuring compliance with regulatory standards.

Key Aspects of Valuation under Section 73 and Rule 2(ix):

  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of the assets provided as security for deposits accepted by the company. This ensures that the security is sufficient to cover the amount of deposits, providing assurance to the depositors.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the assets provided as security. Common methodologies include:
    • Market Approach: Using the prevailing market price of similar assets.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the assets.
    • Cost Approach: Calculating the current replacement cost of the assets, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the assets provided as security.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 73 and Rule 2(ix). The report must be submitted to the Registrar of Companies (RoC) as part of the documentation for accepting deposits.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the assets provided as security are sufficient to cover the deposits, protecting the interests of the depositors and maintaining regulatory compliance.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 73 read with Rule 2(ix) of the Companies (Acceptance of Deposits) Rules, 2014, ensuring that all security valuations are conducted with accuracy and transparency.

Section 192(2) of the Companies Act 2013 outlines the specific requirements for the valuation of non-cash transactions involving directors. Accurate valuation is essential to ensure transparency, fairness and compliance with regulatory standards during these transactions.

Key Aspects of Valuation under Section 192(2):

  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of assets involved in non-cash transactions with directors. This ensures that the transaction is conducted at a fair and equitable price, protecting the interests of the company and its shareholders.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the assets involved in the transaction. Common methodologies include:
    • Market Approach: Using the prevailing market price of similar assets.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the assets.
    • Cost Approach: Calculating the current replacement cost of the assets, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the assets involved in the non-cash transaction.
  • Board and Shareholder Approval: The valuation report must be presented to the board of directors and approved by the shareholders in a general meeting. This ensures that the transaction is transparent and has the necessary approvals from the company’s governance bodies.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 192(2). The report must be included in the company’s records and made available to regulatory authorities if required.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the non-cash transaction involving directors is fair to the company and its shareholders, maintaining investor confidence and supporting equitable financial transactions.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 192(2) of the Companies Act 2013, ensuring that all non-cash transactions involving directors are conducted with accuracy and transparency.

Sections 92 and 93 of the Income Tax Act 1961 outline the specific requirements for the determination of the Arm’s Length Price (ALP) in international transactions and specified domestic transactions between associated enterprises. Accurate valuation is essential to ensure that transactions are conducted at arm’s length, reflecting fair market value and complying with transfer pricing regulations.

Key Aspects of Valuation under Sections 92 & 93:

  • Purpose of Valuation: The valuation is required to determine the Arm’s Length Price (ALP) of transactions between associated enterprises to ensure that the pricing is consistent with market conditions as if the transactions were between unrelated parties. This prevents profit shifting and tax avoidance.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a transfer pricing specialist. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted methods prescribed under the Income Tax Rules to determine the ALP. Common methodologies include:
    • Comparable Uncontrolled Price (CUP) Method: Comparing the price charged in a controlled transaction to the price charged in an uncontrolled transaction in comparable circumstances.
    • Resale Price Method (RPM): Determining the ALP based on the resale price of a product purchased from an associated enterprise.
    • Cost Plus Method (CPM): Adding an appropriate markup to the costs incurred by the supplier of goods or services to an associated enterprise.
    • Profit Split Method (PSM): Allocating combined profits or losses of associated enterprises based on their relative contributions.
    • Transactional Net Margin Method (TNMM): Comparing the net profit margin relative to an appropriate base (e.g., costs, sales) in a controlled transaction to that of uncontrolled transactions.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the methodology, assumptions made, and basis for determining the ALP. This report should provide a clear and thorough analysis supporting the arm’s length nature of the transactions.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Sections 92 and 93, and the corresponding rules under the Income Tax Act. The report must be included in the transfer pricing documentation and made available to the tax authorities upon request.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that international and specified domestic transactions between associated enterprises are conducted at arm’s length, maintaining fairness and compliance with transfer pricing regulations.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Sections 92 and 93 of the Income Tax Act 1961, ensuring that all transactions between associated enterprises are conducted with accuracy and transparency.

Section 50B of the Income Tax Act 1961, read with Rule 11UAE, outlines the specific requirements for the valuation of assets in the context of slump sales. A slump sale involves the transfer of one or more undertakings as a going concern, where the consideration is not allocated to individual assets and liabilities. Accurate valuation is crucial to determine the capital gains arising from such transactions.

Key Aspects of Valuation under Section 50B and Rule 11UAE:

  • Purpose of Valuation: The valuation is required to determine the net worth of the undertaking or division being transferred as a slump sale. This net worth is used to calculate the capital gains tax liability.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the net worth of the undertaking. The key steps include:
    • Asset Valuation: Determining the fair market value (FMV) of all assets of the undertaking, including tangible and intangible assets.
    • Liability Valuation: Determining the book value of liabilities of the undertaking as per the balance sheet on the date of transfer.
  • Net Worth Calculation: The net worth is calculated as the difference between the aggregate FMV of the assets and the book value of liabilities. This net worth forms the basis for computing capital gains under Section 50B.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the net worth determination. This report should provide a clear and thorough analysis supporting the valuation.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 50B and Rule 11UAE. The report must be submitted as part of the tax documentation for the slump sale transaction.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the capital gains arising from slump sales are fairly determined, maintaining compliance with tax regulations and supporting transparent financial reporting.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 50B and Rule 11UAE of the Income Tax Act 1961, ensuring that all slump sale valuations are conducted with accuracy and transparency.

Section 115WC of the Income Tax Act 1961, read with Rules 40C and 40D, outlines the specific requirements for the valuation of fringe benefits, particularly in the context of Employee Stock Option Plans (ESOPs) and specified securities or sweat equity shares. Accurate valuation is crucial to determine the tax liability on these fringe benefits provided to employees.

Key Aspects of Valuation under Section 115WC and Rules 40C & 40D:

  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of specified securities or sweat equity shares provided to employees. This FMV is used to calculate the fringe benefit tax liability.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Requirements under Rule 40C:
    • Employee Stock Option Plans (ESOPs): The FMV of shares or securities allotted to employees under ESOPs is determined on the date of vesting of the option. The valuation should reflect the price at which the shares or securities are traded on the stock exchange on the date of vesting.
    • Unlisted Companies: For unlisted companies, the FMV is determined as per the guidelines prescribed by SEBI or other recognized valuation methods, ensuring that the valuation accurately reflects the true market value.
  • Valuation Requirements under Rule 40D:
    • Specified Securities or Sweat Equity Shares: The FMV of specified securities or sweat equity shares allotted or transferred to employees is determined on the date of allotment or transfer. The valuation should reflect the price at which the shares or securities are traded on the stock exchange on that date.
    • Unlisted Companies: For unlisted companies, the FMV is determined based on the valuation methodology prescribed by SEBI or other recognized standards, ensuring a fair and accurate valuation.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the FMV of the specified securities or sweat equity shares.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 115WC and Rules 40C & 40D. The report must be included in the company’s records and made available to the tax authorities upon request.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the fringe benefits provided to employees are fairly valued, maintaining compliance with tax regulations and supporting transparent financial reporting.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 115WC and Rules 40C & 40D of the Income Tax Act 1961, ensuring that all valuations are conducted with accuracy and transparency.

Section 46(2) of the Insolvency & Bankruptcy Code (IBC) 2016 outlines the specific requirements for identifying and valuing undervalued transactions during the insolvency resolution process. Accurate valuation is essential to ensure transparency, fairness, and the protection of creditors’ interests.

Key Aspects of Valuation under Section 46(2):

  • Purpose of Valuation: The valuation is required to identify transactions where assets of the corporate debtor have been transferred for significantly less than their fair market value. This helps in protecting the interests of creditors and ensuring that the value lost due to undervalued transactions can be recovered.
  • Independent Valuation: The valuation must be conducted by an independent and registered valuer. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: Asset Valuation: The valuer must determine the fair market value (FMV) of the assets involved in the transactions. Common methodologies include:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows that the asset is expected to generate.
    • Cost Approach: Calculating the current replacement cost of the asset, accounting for depreciation and obsolescence.
  • Transaction Analysis: The valuer must analyze the terms and conditions of the transactions to assess whether the assets were transferred for significantly less than their FMV. This involves comparing the transaction value with the FMV determined through valuation methodologies.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the undervalued transactions and the extent of undervaluation.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 46(2) of the IBC 2016. The report must be submitted to the Resolution Professional (RP) and included in the insolvency resolution documentation.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that undervalued transactions are identified and appropriately addressed, protecting the interests of creditors and maintaining compliance with insolvency regulations.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 46(2) of the Insolvency & Bankruptcy Code 2016, ensuring that all undervalued transactions are identified and addressed with accuracy and transparency.

Regulation 87C of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, outlines the specific requirements for the valuation of assets and businesses during certain corporate actions. Accurate valuation is essential to ensure transparency, fairness, and compliance with regulatory standards during these transactions.

Key Aspects of Valuation under Regulation 87C:

  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of assets, businesses, or securities during corporate actions such as mergers, demergers, amalgamations, or other arrangements. This ensures that the transaction is conducted at a fair and equitable price, protecting the interests of shareholders and stakeholders.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer. This ensures objectivity and impartiality in the valuation process, maintaining the integrity of the corporate action.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the assets or businesses involved in the corporate action. Common methodologies include:
    • Market Approach: Comparing the asset or business with similar assets or businesses in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the asset or business.
    • Cost Approach: Calculating the current replacement cost of the asset or business, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the assets or businesses involved in the corporate action.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Regulation 87C. The report must be submitted to SEBI as part of the documentation for the corporate action, ensuring full disclosure and transparency.
  • Fairness and Transparency:Accurate valuation is crucial for ensuring that the corporate action is fair to all shareholders and stakeholders, maintaining investor confidence and supporting equitable financial transactions.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 87C of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ensuring that all corporate actions are conducted with accuracy and transparency.

Regulation 8(16) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, outlines the specific requirements for determining the offer price during a substantial acquisition of shares or a takeover. Accurate valuation is essential to ensure that the offer price is fair and equitable to all shareholders, maintaining transparency and compliance with regulatory standards.

Key Aspects of Valuation under Regulation 8(16):

  • Purpose of Valuation: The valuation is required to determine the offer price in a public offer during a substantial acquisition of shares or a takeover. This ensures that the shareholders receive a fair price for their shares.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The offer price must be determined by considering the highest of the following:
    • Market Price: The volume-weighted average price (VWAP) of the shares for a specified period prior to the public announcement.
    • Negotiated Price: The price at which the acquirer has agreed to acquire shares under a private agreement.
    • Historical Prices: The highest price paid by the acquirer for any acquisition, including a public or private transaction, during the 26 weeks preceding the public announcement.
    • Other Relevant Parameters: The price per share as determined by the valuer considering various factors, including book value, comparable trading multiples, and other relevant financial metrics.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the offer price determination. This report should provide a clear and thorough analysis supporting the offer price.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Regulation 8(16). The report must be submitted to SEBI as part of the public offer documentation, ensuring full disclosure and transparency.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the offer price is fair to all shareholders, maintaining investor confidence and supporting equitable financial transactions.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 8(16) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, ensuring that all public offers are conducted with accuracy and transparency.

Regulation 163(3) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 outlines the specific requirements for the valuation of shares when a company issues shares on a preferential basis. Accurate valuation is essential to ensure transparency, fairness and compliance with regulatory standards during these transactions.

Key Aspects of Valuation under Regulation 163(3):

  • Purpose of Valuation: The valuation is required to determine the fair price at which shares are issued on a preferential basis to ensure that the shares are issued at a fair and equitable price, protecting the interests of existing shareholders and potential investors.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The price of the equity shares to be issued on a preferential basis must be determined using the following methods:
    • For Listed Companies: The price shall be determined based on the higher of the following:
      • The average of the weekly high and low of the volume-weighted average price (VWAP) of the related equity shares quoted on the recognized stock exchange during the 26 weeks preceding the relevant date.
      • The average of the weekly high and low of the VWAP of the related equity shares quoted on the recognized stock exchange during the 2 weeks preceding the relevant date.
    • For Frequently Traded Shares: The price determined as per the above methods ensures that the valuation reflects the current market conditions and trading performance.
    • For Infrequently Traded Shares or Unlisted Companies: The price shall be determined by an independent valuer using recognized methods such as the Net Asset Value (NAV) method, the Price-to-Earnings (P/E) multiple method, or other suitable valuation techniques that ensure a fair market value.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the price determination. This report should provide a clear and thorough analysis of the fair price of the shares to be issued.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Regulation 163(3). The report must be submitted to SEBI as part of the preferential issue documentation, ensuring full disclosure and transparency.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the preferential issue is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 163(3) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, ensuring that all preferential issues are conducted with accuracy and transparency.

Regulation 165 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 outlines the specific requirements for the pricing of frequently traded shares during preferential issues. Accurate valuation is essential to ensure transparency, fairness and compliance with regulatory standards during these transactions.

Key Aspects of Valuation under Regulation 165:

  • Purpose of Valuation: The valuation is required to determine the pricing of frequently traded shares during a preferential issue. This ensures that the shares are issued at a fair and equitable price, protecting the interests of existing shareholders and potential investors.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The price of the equity shares to be issued on a preferential basis must be determined using the following methods:
    • For Frequently Traded Shares: The price shall be determined based on the higher of the following:
      • The average of the weekly high and low of the volume-weighted average price (VWAP) of the related equity shares quoted on the recognized stock exchange during the 90 trading days preceding the relevant date.
      • The average of the weekly high and low of the VWAP of the related equity shares quoted on the recognized stock exchange during the 10 trading days preceding the relevant date.
    • Additional Pricing Considerations: The pricing must also account for other factors such as market conditions, trading volumes, and any relevant corporate actions or announcements that may impact the share price.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the price determination. This report should provide a clear and thorough analysis of the fair price of the shares to be issued.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Regulation 165. The report must be submitted to SEBI as part of the preferential issue documentation, ensuring full disclosure and transparency.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the preferential issue is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 165 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, ensuring that all preferential issues are conducted with accuracy and transparency.

Company Act u/s 39 - Issue of shares for consideration other than cash
Section 39 of the Companies Act 2013, read with Rule 12(5) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, outlines the specific requirements for the valuation of shares when they are issued for consideration other than cash. Accurate valuation is essential to ensure transparency, fairness and compliance with regulatory standards during these transactions. Key Aspects of Valuation under Section 39 and Rule 12(5):
  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of shares issued for consideration other than cash. This ensures that the transaction is conducted at a fair and equitable price, reflecting the true value of the consideration received.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the shares. Common methodologies include:
    • Market Approach: Using the prevailing market price of the company’s shares if they are listed on a recognized stock exchange.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the company.
    • Net Asset Value (NAV) Approach: Calculating the value of the company’s assets minus its liabilities.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the shares issued for consideration other than cash.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 39 and Rule 12(5). The report must be submitted to the Registrar of Companies (RoC) as part of the issue documentation.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the issue of shares for consideration other than cash is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 39 read with Rule 12(5) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, ensuring that all share issuances are conducted with accuracy and transparency.
Company Act u/s 54 - Fair price for issue of sweat equity
Section 54 of the Companies Act 2013, read with Rules 8(6) and 8(7) of the Companies (Share Capital and Debentures) Rules, 2014, outlines the specific requirements for the issuance of sweat equity shares. Accurate valuation is essential to ensure transparency, fairness, and compliance with regulatory standards during these transactions. Key Aspects of Valuation under Section 54 and Rules 8(6) and 8(7):
  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of sweat equity shares being issued to employees or directors in exchange for their services or know-how. This ensures that the transaction is conducted at a fair and equitable price, reflecting the true value of the consideration received.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Requirements:
    • under Rule 8(6): Fair Price Justification: When sweat equity shares are issued, the company must justify the fair price of these shares. The valuation must take into account various factors, including market conditions, the company’s financial performance, and the contribution made by the employees or directors receiving the shares.
    • under Rule 8(7): Valuation of Intellectual Property (IP) and Know-How: If sweat equity shares are being issued in consideration for the acquisition of intellectual property rights, know-how, or any other intangible asset, the valuation must also include the fair value of these assets. This ensures that the company accurately reflects the value of the IP or know-how being acquired through the issuance of sweat equity shares.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the sweat equity shares, as well as any IP or know-how being acquired.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 54 and Rules 8(6) and 8(7). The report must be submitted to the Registrar of Companies (RoC) as part of the share issuance documentation.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the issuance of sweat equity shares is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 54 read with Rule 8(6) and Rule 8(7) of the Companies (Share Capital and Debentures) Rules, 2014, ensuring that all sweat equity issuances are conducted with accuracy and transparency.
Company Act u/s 62 - Share issue other than Right or ESOP
Section 62(1)(c) of the Companies Act 2013, read with Rule 13(1) of the Companies (Share Capital and Debentures) Rules, 2014, outlines the specific requirements for the valuation of shares when a company proposes to issue shares to any persons other than existing shareholders, through preferential allotment. Accurate valuation is crucial to ensure transparency, fairness, and compliance with regulatory standards during these transactions. Key Aspects of Valuation under Section 62(1)(c) and Rule 13(1):
  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of shares issued on a preferential basis to persons other than the existing shareholders. This ensures that the shares are issued at a fair and equitable price.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the shares. Common methodologies include:
    • Market Approach: Using the prevailing market price of the company’s shares if they are listed on a recognized stock exchange.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the company.
    • Net Asset Value (NAV) Approach: Calculating the value of the company’s assets minus its liabilities.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the shares to be issued.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 62(1)(c) and Rule 13(1). The report must be submitted to the Registrar of Companies (RoC) as part of the share issuance documentation.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the issuance of shares on a preferential basis is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 62(1)(c) read with Rule 13(1) of the Companies (Share Capital and Debentures) Rules, 2014, ensuring that all preferential share issuances are conducted with accuracy and transparency.
Company Act u/s 67 - Issue of share by providing loan
Section 67(3) of the Companies Act 2013, read with Rule 16(1)(c) of the Companies (Share Capital and Debentures) Rules, 2014, outlines the specific requirements for the valuation of shares when an unlisted company issues shares to its employees or to a trust for the benefit of its employees under a scheme. Accurate valuation is essential to ensure transparency, fairness, and compliance with regulatory standards during these transactions. Key Aspects of Valuation under Section 67(3) and Rule 16(1)(c):
  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of shares issued by an unlisted company to its employees or to a trust for the benefit of employees. This ensures that the shares are issued at a fair and equitable price.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the shares. Common methodologies include:
    • Market Approach: Using the prevailing market price of the company’s shares if they are listed on a recognized stock exchange.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the company.
    • Net Asset Value (NAV) Approach: Calculating the value of the company’s assets minus its liabilities.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the shares to be issued.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 67(3) and Rule 16(1)(c). The report must be included in the records of the company and made available to the regulatory authorities if required.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the issuance of shares to employees or trusts is fair to all stakeholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 67(3) read with Rule 16(1)(c) of the Companies (Share Capital and Debentures) Rules, 2014, ensuring that all employee share issuances are conducted with accuracy and transparency.
Company Act u/s 73 - Issue of secured bonds or debentures
Section 73 of the Companies Act 2013, read with Rule 2(ix) of the Companies (Acceptance of Deposits) Rules, 2014, outlines the specific requirements for the valuation of assets provided as security when a company accepts deposits e.g. issue of secured bonds / debentures. Accurate valuation is crucial to ensure that the assets provided as security are fairly valued, protecting the interests of the depositors and ensuring compliance with regulatory standards. Key Aspects of Valuation under Section 73 and Rule 2(ix):
  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of the assets provided as security for deposits accepted by the company. This ensures that the security is sufficient to cover the amount of deposits, providing assurance to the depositors.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the assets provided as security. Common methodologies include:
    • Market Approach: Using the prevailing market price of similar assets.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the assets.
    • Cost Approach: Calculating the current replacement cost of the assets, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the assets provided as security.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 73 and Rule 2(ix). The report must be submitted to the Registrar of Companies (RoC) as part of the documentation for accepting deposits.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the assets provided as security are sufficient to cover the deposits, protecting the interests of the depositors and maintaining regulatory compliance.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 73 read with Rule 2(ix) of the Companies (Acceptance of Deposits) Rules, 2014, ensuring that all security valuations are conducted with accuracy and transparency.
Company Act u/s 192 - Non-cash transaction with directions
Section 192(2) of the Companies Act 2013 outlines the specific requirements for the valuation of non-cash transactions involving directors. Accurate valuation is essential to ensure transparency, fairness and compliance with regulatory standards during these transactions. Key Aspects of Valuation under Section 192(2):
  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of assets involved in non-cash transactions with directors. This ensures that the transaction is conducted at a fair and equitable price, protecting the interests of the company and its shareholders.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the assets involved in the transaction. Common methodologies include:
    • Market Approach: Using the prevailing market price of similar assets.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the assets.
    • Cost Approach: Calculating the current replacement cost of the assets, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the assets involved in the non-cash transaction.
  • Board and Shareholder Approval: The valuation report must be presented to the board of directors and approved by the shareholders in a general meeting. This ensures that the transaction is transparent and has the necessary approvals from the company’s governance bodies.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 192(2). The report must be included in the company’s records and made available to regulatory authorities if required.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the non-cash transaction involving directors is fair to the company and its shareholders, maintaining investor confidence and supporting equitable financial transactions.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 192(2) of the Companies Act 2013, ensuring that all non-cash transactions involving directors are conducted with accuracy and transparency.
Income Tax u/s 92 & 93 - Determining arm's length price
Sections 92 and 93 of the Income Tax Act 1961 outline the specific requirements for the determination of the Arm’s Length Price (ALP) in international transactions and specified domestic transactions between associated enterprises. Accurate valuation is essential to ensure that transactions are conducted at arm’s length, reflecting fair market value and complying with transfer pricing regulations. Key Aspects of Valuation under Sections 92 & 93:
  • Purpose of Valuation: The valuation is required to determine the Arm’s Length Price (ALP) of transactions between associated enterprises to ensure that the pricing is consistent with market conditions as if the transactions were between unrelated parties. This prevents profit shifting and tax avoidance.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a transfer pricing specialist. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted methods prescribed under the Income Tax Rules to determine the ALP. Common methodologies include:
    • Comparable Uncontrolled Price (CUP) Method: Comparing the price charged in a controlled transaction to the price charged in an uncontrolled transaction in comparable circumstances.
    • Resale Price Method (RPM): Determining the ALP based on the resale price of a product purchased from an associated enterprise.
    • Cost Plus Method (CPM): Adding an appropriate markup to the costs incurred by the supplier of goods or services to an associated enterprise.
    • Profit Split Method (PSM): Allocating combined profits or losses of associated enterprises based on their relative contributions.
    • Transactional Net Margin Method (TNMM): Comparing the net profit margin relative to an appropriate base (e.g., costs, sales) in a controlled transaction to that of uncontrolled transactions.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the methodology, assumptions made, and basis for determining the ALP. This report should provide a clear and thorough analysis supporting the arm’s length nature of the transactions.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Sections 92 and 93, and the corresponding rules under the Income Tax Act. The report must be included in the transfer pricing documentation and made available to the tax authorities upon request.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that international and specified domestic transactions between associated enterprises are conducted at arm’s length, maintaining fairness and compliance with transfer pricing regulations.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Sections 92 and 93 of the Income Tax Act 1961, ensuring that all transactions between associated enterprises are conducted with accuracy and transparency.
Income Tax u/s 50B - Slump Sale
Section 50B of the Income Tax Act 1961, read with Rule 11UAE, outlines the specific requirements for the valuation of assets in the context of slump sales. A slump sale involves the transfer of one or more undertakings as a going concern, where the consideration is not allocated to individual assets and liabilities. Accurate valuation is crucial to determine the capital gains arising from such transactions. Key Aspects of Valuation under Section 50B and Rule 11UAE:
  • Purpose of Valuation: The valuation is required to determine the net worth of the undertaking or division being transferred as a slump sale. This net worth is used to calculate the capital gains tax liability.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the net worth of the undertaking. The key steps include:
    • Asset Valuation: Determining the fair market value (FMV) of all assets of the undertaking, including tangible and intangible assets.
    • Liability Valuation: Determining the book value of liabilities of the undertaking as per the balance sheet on the date of transfer.
  • Net Worth Calculation: The net worth is calculated as the difference between the aggregate FMV of the assets and the book value of liabilities. This net worth forms the basis for computing capital gains under Section 50B.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the net worth determination. This report should provide a clear and thorough analysis supporting the valuation.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 50B and Rule 11UAE. The report must be submitted as part of the tax documentation for the slump sale transaction.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the capital gains arising from slump sales are fairly determined, maintaining compliance with tax regulations and supporting transparent financial reporting.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 50B and Rule 11UAE of the Income Tax Act 1961, ensuring that all slump sale valuations are conducted with accuracy and transparency.
Income Tax u/s 115WC - Valuation of specified security or sweat equity
Section 115WC of the Income Tax Act 1961, read with Rules 40C and 40D, outlines the specific requirements for the valuation of fringe benefits, particularly in the context of Employee Stock Option Plans (ESOPs) and specified securities or sweat equity shares. Accurate valuation is crucial to determine the tax liability on these fringe benefits provided to employees. Key Aspects of Valuation under Section 115WC and Rules 40C & 40D:
  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of specified securities or sweat equity shares provided to employees. This FMV is used to calculate the fringe benefit tax liability.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Requirements under Rule 40C:
    • Employee Stock Option Plans (ESOPs): The FMV of shares or securities allotted to employees under ESOPs is determined on the date of vesting of the option. The valuation should reflect the price at which the shares or securities are traded on the stock exchange on the date of vesting.
    • Unlisted Companies: For unlisted companies, the FMV is determined as per the guidelines prescribed by SEBI or other recognized valuation methods, ensuring that the valuation accurately reflects the true market value.
  • Valuation Requirements under Rule 40D:
    • Specified Securities or Sweat Equity Shares: The FMV of specified securities or sweat equity shares allotted or transferred to employees is determined on the date of allotment or transfer. The valuation should reflect the price at which the shares or securities are traded on the stock exchange on that date.
    • Unlisted Companies: For unlisted companies, the FMV is determined based on the valuation methodology prescribed by SEBI or other recognized standards, ensuring a fair and accurate valuation.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the FMV of the specified securities or sweat equity shares.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 115WC and Rules 40C & 40D. The report must be included in the company’s records and made available to the tax authorities upon request.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the fringe benefits provided to employees are fairly valued, maintaining compliance with tax regulations and supporting transparent financial reporting.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 115WC and Rules 40C & 40D of the Income Tax Act 1961, ensuring that all valuations are conducted with accuracy and transparency.
IBC u/s 46 - Valuation of the Undervalued Transactions
Section 46(2) of the Insolvency & Bankruptcy Code (IBC) 2016 outlines the specific requirements for identifying and valuing undervalued transactions during the insolvency resolution process. Accurate valuation is essential to ensure transparency, fairness, and the protection of creditors’ interests. Key Aspects of Valuation under Section 46(2):
  • Purpose of Valuation: The valuation is required to identify transactions where assets of the corporate debtor have been transferred for significantly less than their fair market value. This helps in protecting the interests of creditors and ensuring that the value lost due to undervalued transactions can be recovered.
  • Independent Valuation: The valuation must be conducted by an independent and registered valuer. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: Asset Valuation: The valuer must determine the fair market value (FMV) of the assets involved in the transactions. Common methodologies include:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows that the asset is expected to generate.
    • Cost Approach: Calculating the current replacement cost of the asset, accounting for depreciation and obsolescence.
  • Transaction Analysis: The valuer must analyze the terms and conditions of the transactions to assess whether the assets were transferred for significantly less than their FMV. This involves comparing the transaction value with the FMV determined through valuation methodologies.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the undervalued transactions and the extent of undervaluation.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Section 46(2) of the IBC 2016. The report must be submitted to the Resolution Professional (RP) and included in the insolvency resolution documentation.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that undervalued transactions are identified and appropriately addressed, protecting the interests of creditors and maintaining compliance with insolvency regulations.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 46(2) of the Insolvency & Bankruptcy Code 2016, ensuring that all undervalued transactions are identified and addressed with accuracy and transparency.
SEBI - Regulation 87C - Quarterly Disclosure under listing obligations
Regulation 87C of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, outlines the specific requirements for the valuation of assets and businesses during certain corporate actions. Accurate valuation is essential to ensure transparency, fairness, and compliance with regulatory standards during these transactions. Key Aspects of Valuation under Regulation 87C:
  • Purpose of Valuation: The valuation is required to determine the fair market value (FMV) of assets, businesses, or securities during corporate actions such as mergers, demergers, amalgamations, or other arrangements. This ensures that the transaction is conducted at a fair and equitable price, protecting the interests of shareholders and stakeholders.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer. This ensures objectivity and impartiality in the valuation process, maintaining the integrity of the corporate action.
  • Valuation Methodology: The valuer must use recognized and accepted valuation methods to determine the FMV of the assets or businesses involved in the corporate action. Common methodologies include:
    • Market Approach: Comparing the asset or business with similar assets or businesses in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows expected to be generated by the asset or business.
    • Cost Approach: Calculating the current replacement cost of the asset or business, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the valuation. This report should provide a clear and thorough analysis of the fair market value of the assets or businesses involved in the corporate action.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Regulation 87C. The report must be submitted to SEBI as part of the documentation for the corporate action, ensuring full disclosure and transparency.
  • Fairness and Transparency:Accurate valuation is crucial for ensuring that the corporate action is fair to all shareholders and stakeholders, maintaining investor confidence and supporting equitable financial transactions.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 87C of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ensuring that all corporate actions are conducted with accuracy and transparency.
SEBI - Regulation 8 - Direct acquisition under takeover code
Regulation 8(16) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, outlines the specific requirements for determining the offer price during a substantial acquisition of shares or a takeover. Accurate valuation is essential to ensure that the offer price is fair and equitable to all shareholders, maintaining transparency and compliance with regulatory standards. Key Aspects of Valuation under Regulation 8(16):
  • Purpose of Valuation: The valuation is required to determine the offer price in a public offer during a substantial acquisition of shares or a takeover. This ensures that the shareholders receive a fair price for their shares.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The offer price must be determined by considering the highest of the following:
    • Market Price: The volume-weighted average price (VWAP) of the shares for a specified period prior to the public announcement.
    • Negotiated Price: The price at which the acquirer has agreed to acquire shares under a private agreement.
    • Historical Prices: The highest price paid by the acquirer for any acquisition, including a public or private transaction, during the 26 weeks preceding the public announcement.
    • Other Relevant Parameters: The price per share as determined by the valuer considering various factors, including book value, comparable trading multiples, and other relevant financial metrics.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the offer price determination. This report should provide a clear and thorough analysis supporting the offer price.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Regulation 8(16). The report must be submitted to SEBI as part of the public offer documentation, ensuring full disclosure and transparency.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the offer price is fair to all shareholders, maintaining investor confidence and supporting equitable financial transactions.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 8(16) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, ensuring that all public offers are conducted with accuracy and transparency.
SEBI - Regulation 163 of ICDR - Preferential Allotment for other than cash
Regulation 163(3) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 outlines the specific requirements for the valuation of shares when a company issues shares on a preferential basis. Accurate valuation is essential to ensure transparency, fairness and compliance with regulatory standards during these transactions. Key Aspects of Valuation under Regulation 163(3):
  • Purpose of Valuation: The valuation is required to determine the fair price at which shares are issued on a preferential basis to ensure that the shares are issued at a fair and equitable price, protecting the interests of existing shareholders and potential investors.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The price of the equity shares to be issued on a preferential basis must be determined using the following methods:
    • For Listed Companies: The price shall be determined based on the higher of the following:
      • The average of the weekly high and low of the volume-weighted average price (VWAP) of the related equity shares quoted on the recognized stock exchange during the 26 weeks preceding the relevant date.
      • The average of the weekly high and low of the VWAP of the related equity shares quoted on the recognized stock exchange during the 2 weeks preceding the relevant date.
    • For Frequently Traded Shares: The price determined as per the above methods ensures that the valuation reflects the current market conditions and trading performance.
    • For Infrequently Traded Shares or Unlisted Companies: The price shall be determined by an independent valuer using recognized methods such as the Net Asset Value (NAV) method, the Price-to-Earnings (P/E) multiple method, or other suitable valuation techniques that ensure a fair market value.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the price determination. This report should provide a clear and thorough analysis of the fair price of the shares to be issued.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Regulation 163(3). The report must be submitted to SEBI as part of the preferential issue documentation, ensuring full disclosure and transparency.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the preferential issue is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 163(3) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, ensuring that all preferential issues are conducted with accuracy and transparency.
SEBI - Regulation 165 - of ICDR Pricing of Infrequently Traded Share
Regulation 165 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 outlines the specific requirements for the pricing of frequently traded shares during preferential issues. Accurate valuation is essential to ensure transparency, fairness and compliance with regulatory standards during these transactions. Key Aspects of Valuation under Regulation 165:
  • Purpose of Valuation: The valuation is required to determine the pricing of frequently traded shares during a preferential issue. This ensures that the shares are issued at a fair and equitable price, protecting the interests of existing shareholders and potential investors.
  • Independent Valuation: The valuation must be conducted by an independent and qualified valuer, typically a SEBI-registered Category I Merchant Banker. This ensures objectivity and impartiality in the valuation process.
  • Valuation Methodology: The price of the equity shares to be issued on a preferential basis must be determined using the following methods:
    • For Frequently Traded Shares: The price shall be determined based on the higher of the following:
      • The average of the weekly high and low of the volume-weighted average price (VWAP) of the related equity shares quoted on the recognized stock exchange during the 90 trading days preceding the relevant date.
      • The average of the weekly high and low of the VWAP of the related equity shares quoted on the recognized stock exchange during the 10 trading days preceding the relevant date.
    • Additional Pricing Considerations: The pricing must also account for other factors such as market conditions, trading volumes, and any relevant corporate actions or announcements that may impact the share price.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report detailing the valuation methodology, assumptions made, and the basis of the price determination. This report should provide a clear and thorough analysis of the fair price of the shares to be issued.
  • Regulatory Compliance: The valuation report must comply with the guidelines set forth in Regulation 165. The report must be submitted to SEBI as part of the preferential issue documentation, ensuring full disclosure and transparency.
  • Fairness and Transparency: Accurate valuation is crucial for ensuring that the preferential issue is fair to all shareholders and complies with regulatory standards. It helps maintain investor confidence and supports equitable financial transactions.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 165 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, ensuring that all preferential issues are conducted with accuracy and transparency.