When is a Share Valuation Report required?
· Merger and Amalgamation
· Rights Issue (to existing Non-Resident shareholders)
· Preferential allotment of shares
· Private Placement of shares
· Purchase of minority shareholding by majority shareholders
· Buy back of Shares
· Issue of convertible Instruments such as Fully Convertible Preference Shares (FCPS) / Fully Convertible Debentures (FCDs) on preferential basis / private placement basis
· Acquisition of assets by a Company from a Director or a person connected with such director for consideration other than cash
· Issue of Bonds/ Debentures
· Acceptance of Deposits
· Issue of Employee Stock Option Plans/ Sweat Equity shares
· Issue of shares for Consideration other than cash
· Valuation Requirement as per IND AS 113 (If opted for revaluation approach instead of cost approach)
· Certain Related party transactions as covered u/s 46(2) of the IBC Code, 2016
· Valuation of assets for submission of report by the liquidator
· Voluntary Liquidation of the Company
Please Note
· If valuation is as per Discounted Cash Flow (DCF) Method – Valuation is to be carried out by a Registered Valuer (RV) who is also a SEBI Registered Category I Merchant Banker
· If valuation is as per Net asset Value (NAV) Method or any other method – Valuation can be carried out by a RV
· The provisions of section 56(2) (x) read with Rule 11UA (1) (c) (b) has to be kept in mind from recipient perspective.
Ideal steps for tax neutral allotment in the hands of issuer and subscriber:
Step 1 - Value as per section 56(2) (x) read with Rule 11UA (1) (c) (b) i.e. NAV method considering market value of jewellery, archaeological collection, stamp duty value of land and building etc.
Step 2 - If one is adopting DCF method, ensure that value as per Step 1 is considered
Step 3 - If one is adopting NAV method, then adopt price as per step 1 and state that it falls within other method to the satisfaction of Assessing Officer (AO)