Company Valuation in Dausa

What Is Company Valuation?

Company valuation is the valuation of a company as a legal and economic entity, usually in connection with a corporate action. While business valuation is broad and applies to any business, company valuation is typically linked to events in the life of a company: issuing new shares, admitting an investor, merging or demerging, buying out shareholders, granting ESOPs, selling a subsidiary, or complying with a provision that requires a valuation.

For a company, valuation questions are complicated by its capital structure and group. There may be several classes of shares with different rights, convertible instruments, holding and subsidiary companies, related-party balances and contingent liabilities. The value of the company, the value of its equity and the value per share are connected but not the same, and sum-of-the-parts approaches are often needed for groups.

The most important practical point is that many corporate actions require a valuation by a specific professional under a specific law. A valuation that is perfectly sound commercially can still be unusable for the corporate action if it was not issued by the right person. Valuation, due diligence and professional opinion are different things. A valuation estimates value; due diligence investigates facts; a professional opinion is a formal view given by a qualified professional, such as a legal opinion or a certificate. An indicative valuation prepared for planning or negotiation is not a statutory valuation. Where the law requires a valuation or certificate from a registered valuer, a SEBI-registered merchant banker, a chartered accountant or a cost accountant, that report must be issued and signed by that professional, and we coordinate with the appropriate registered professional.

Who Needs Company Valuation?

• Companies issuing shares to new or existing investors
• Companies planning mergers, demergers or schemes of arrangement
• Promoters buying out or selling shares
• Companies granting ESOPs or restructuring capital
• Companies with group structures needing sum-of-the-parts value
• Companies with non-resident investors or shareholders
• Boards seeking independent value for decisions

When Is Company Valuation Required?

Some corporate actions legally require a valuation. Examples include:

• Preferential allotment of shares under Section 62(1)(c) of the Companies Act, 2013 and the related rules
• Certain non-cash transactions and schemes of arrangement under the Act
• Valuation by the company liquidator in winding up, under Section 281
• Issue or transfer of shares involving non-residents in unlisted companies, under FEMA pricing rules
• Transactions where income tax law prescribes fair market value rules
• Insolvency resolution and liquidation under the IBC framework, where registered valuers determine fair and liquidation value
• Voluntary valuations for board decisions, negotiations and disputes

What Our Company Valuation Service Includes

• Understanding the company, group structure, capital structure and the corporate action
• Mapping which law and which professional applies to the valuation
• Review of financial statements, projections and group data
• Valuation approaches: DCF, comparable companies and transactions, net assets, sum of the parts
• Adjustments for debt, cash, contingent liabilities and related-party balances
• Allocation of value among equity, preference and convertible instruments
• Per-share value computation for the relevant classes
• Effect of control, minority and marketability where relevant
• Preparation of the information pack for the registered valuer, merchant banker or chartered accountant where a statutory report is required
• Coordination with the professional who will sign the statutory report
• Indicative valuation report for board and negotiation use
• Reconciliation between indicative value and the statutory value

Legal and Practical Considerations

Registered valuers. Section 247 of the Companies Act, 2013 and the Companies (Registered Valuers and Valuation) Rules, 2017 require that valuations required under the Act be done by a registered valuer, registered with the Insolvency and Bankruptcy Board of India through a registered valuer organisation, with effect from 1 February 2019. The valuer must be registered in the relevant asset class, and must follow the rules on independence, conduct and report contents. The Companies Act valuation for preferential allotment under Section 62(1)(c) and Rule 13 is a common example.

FEMA. Issue of shares of an unlisted company to non-residents, and transfers between residents and non-residents, must follow pricing guidelines under the Non-debt Instruments Rules, 2019. The valuation is based on an internationally accepted pricing methodology on an arm's length basis and certified by a chartered accountant, SEBI-registered merchant banker or practising cost accountant, depending on the case. Certain cases, such as share swaps, need a merchant banker or investment banker. The valuation report should be recent as at the date of issue or transfer, as the rules provide.

Income tax. Tax fair market value rules for unquoted shares now sit in the Income-tax Rules, 2026, effective from 1 April 2026, which consolidated the earlier Rule 11UA family. Angel tax was abolished. The method and the professional who can certify depend on the rule and should be verified with a tax professional.

Schemes and listed companies. Mergers and schemes involve valuation reports and, for listed companies, fairness opinions under SEBI requirements. Pricing for preferential issues by listed companies follows SEBI regulations.

Different values for different laws. A company's shares can have different values under the Companies Act, FEMA and tax rules, because each prescribes its own method and professional. This is normal and should be planned for.

Independence. A valuer who signs a statutory valuation must be independent and eligible, and a person who has an interest should not sign.

Common Mistakes in Company Valuation

• Getting a commercial valuation when a registered valuer's report is needed
• Using one valuation for Companies Act, FEMA and tax purposes without checking each rule
• Valuation date not matching the date of the transaction
• Ignoring convertible instruments and different classes of shares
• Not allowing for related-party balances and contingent liabilities
• Stale valuation report used after the validity period
• Using an interested person as the valuer
• Not updating projections before the valuation

Professional Fees, Government Fees and Timeline

There is no government fee for our indicative valuation. Fees of registered valuers, merchant bankers, chartered accountants or cost accountants for statutory reports are set by them and are separate. Stamp duty, filing fees and other costs of the corporate action are also separate. Our professional fees depend on the size and structure of the company and group and the number of valuations needed. An engagement typically takes 7 to 15 working days after information is received.

Company Valuation vs Business Valuation vs Share Valuation

Company valuation focuses on valuations linked to corporate actions and statutory requirements. Business valuation is broader and applies to any business. Share valuation concentrates on the value per share of particular classes. Related services include Business Valuation, Share Valuation and Valuation for Fundraising.

Need Professional Assistance With Company Valuation?

The right valuation, from the right professional, makes a corporate action smoother and safer. The Legal Bank can help you map the requirement, prepare the valuation and coordinate with the professional who must sign. Share your requirement to discuss the next steps.