Company Valuation

Company valuations required under the Companies Act, 2013 must be conducted by an IBBI-Registered Valuer, under Section 247 read with the Companies (Registered Valuers and Valuation) Rules, 2017. The Central Government delegated its Section 247 authority to the Insolvency and Bankruptcy Board of India (IBBI), which now administers the registration regime: only individuals (or valuer-partnership entities) who are enrolled with a Registered Valuer Organisation, meet the qualification and experience criteria under Rule 4, and have passed the IBBI valuation examination may be registered as valuers. This requirement has been mandatory since 31 January 2019, when the transitional period under the 2017 Rules ended.

This registered-valuer mandate applies to valuations under specific Companies Act provisions — including preferential allotment of shares (Section 62), mergers and amalgamations (Sections 230–232), and squeeze-out of minority shareholders (Section 236) — and is the correct statutory anchor for company valuation engagements generally.

We deliberately do not frame company valuation around Section 56(2)(viib) of the Income-tax Act, 1961 (the "angel tax" fair-market-value provision), since that provision was abolished for all investor classes by the Finance (No. 2) Act, 2024, effective AY 2025-26. Where a valuation is needed for income-tax purposes, the live anchors are Section 50CA (FMV of unquoted shares on transfer) and Section 56(2)(x) (FMV-based taxation of property received without adequate consideration), both applying the Rule 11UA valuation methodology — distinct from, though procedurally related to, the Companies Act registered-valuer requirement above.

Company valuation is the determination of the worth of a business or its shares for a defined purpose — fundraising, ESOPs, M&A, statutory filings, disputes or financial reporting. In India the practice is regulated at two levels: Section 247 of the Companies Act 2013 requires valuations under the Act to be done by a registered valuer, and the Companies (Registered Valuers and Valuation) Rules 2017 govern the profession; for tax purposes, the valuation of unquoted shares follows the methods in Rule 11UA of the Income-tax Rules 1962; and for financial reporting, fair value is measured under Ind AS 113.

The purpose defines the method. A startup raising capital is valued on its future cash flows and the market's comparable transactions — the DCF or market approach. A company issuing shares to an investor or under an ESOP needs the value tested against Rule 11UA, because the tax law treats a share issue above fair market value as taxable income under Section 56(2)(viib) for the years in which that provision applied. An M&A transaction needs a defensible value for the buyer's board, the seller's negotiation and the diligence. Each use case demands a different methodology and a different documentation standard.

The failure of a valuation is always discovered by someone else. A tax officer re-computing the fair market value, an auditor testing an impairment, a tribunal reviewing a fairness opinion — each pulls the valuation apart on its assumptions. A valuation without workings, or with assumptions that do not match the business, collapses under that scrutiny; a valuation built on documented assumptions survives it.

This service is for companies valuing their equity for fundraising, ESOPs, investor disputes, M&A and regulatory filings. We value businesses and unquoted shares under Rule 11UA of the Income-tax Rules 1962 and the registered valuer framework of Section 247 of the Companies Act 2013, prepare the valuation with the DCF, market or NAV methodology appropriate to the purpose, and document the assumptions so the number holds in tax, audit and litigation.