Following are the provisions under various laws which talks about valuation while issuance of fresh shares –
Section 247 provides that for the purpose of valuation of shares under the Companies Act 2013, only a report issued and signed by a registered valuer shall be acceptable under this law.
Section 56 provides that for the purpose of arriving at the fair value of shares, only a merchant banker report shall be allowed.
The fair value of shares needs to be duly certified by a CA or a SEBI registered merchant banker.
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We have significant valuation expertise and experience that enable effective and comprehensive valuation services. Valuation requires an understanding of business opportunities and risks. Our thorough research and analysis, expertise and experience enable us to evaluate client’s business’s specific opportunities and risks and management’s abilities to manage them, which is a critical valuation driver. Startup Movers can help you in Valuation Advisory.
Valuation matters to every start-up because it helps in deciding the amount of equity an entrepreneur has to give to an investor in exchange for requisite funds. This implies that if a company has a higher valuation, it has to give a lesser amount of equity or shares to an investor in exchange for seed investment. Not only for entrepreneurs, but start-up valuation is also vital from investors’ point of view because it helps them gauge the amount of return, they will receive on their invested amount.
In the current scenario, to comply with 3 prevailing laws affecting such valuation, a company will be required to get a separate valuation report from Merchant Banker & Registered Valuer.
1. The company is a start-up recognized by DPIT under Start-up India>
2. Has applied for Angel Tax Exemption under section 56 of income tax and has file duly signed declaration to DIPP that it fulfils the conditions after which DPIIT shall forward the same to the CBDT.
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