Sweat Equity Valuation (Section 54)

Companies issuing sweat equity shares to directors or employees under Section 54 of the Companies Act must determine the fair value of such shares through a SEBI registered valuer. The valuation establishes the price at which sweat equity shares are issued, the accounting entry in the books, and the perquisite value for income tax purposes (Form 16 disclosure). Our sweat equity valuation uses the DCF method (or net asset/market comparable where applicable), is performed by a SEBI Category I Registered Valuer, and produces a report suitable for board approval, ROC filing, and statutory audit purposes.