Mode Of Issue And Its Valuation


Registered Valuer’ means a person registered as a valuer under Chapter XVII of the Act whereas the Ministry of Corporate Affairs vide its notification has implemented the Section 247 and Registered Valuer Rules w.e.f.18th October2017.

As per section 247 of the Companies Act the estimate in respect of stock shares, goodwill or securities, any property, any asset(hereunder referred to as the assets), net worth and liability of a company under the provision of this Act, or debentures, it shall be evaluate by a person having related experience and qualification and registered too as a valuer in such terms and conditions or manner as may be prescribed.

So, with the effect of this, the persons who were rendering the valuation service under the act may continue to render without a certificate of registration up to 31st January 2019, and with 1st February 2019, the valuation report will be only given by the registered valuer only as prescribed under section 247.

Whereas we see the Valuation through the Income Tax perspective, there are various rules such as Rule11U, Rule 11UA, Rule 11UAA, and Rule 11UB which cover various valuation options for the valuation of equity shares and other securities under The Income Tax Act,2013.

S.NoMode of AllotmentSection & ProvisionsValuation AsPer Companies Act
1Rights Issue of Shares  A rights issue is an invitation to existing shareholders to purchase additional new shares in the companyNo requirement ofvaluation report for Right issue irrespective whether shares are issued on face value or premium
2Preferential Allotment of SharesAn issue of security or other shares, by a company to any select group of persons or an individual on a preferential basis.It is important to get report from registered valuer whether the shares are released on premium or face value.
3Private Placement of SharesPrivate Placement means any offer or invitation to subscribe or issue of Shares to a selected group of persons by a company through private placement offer-cum-application, subject to specific conditions.It is Mandatory to obtain a valuation report from a Registered valuer irrespective of shares are issued on face value or premium.
4Conversion Of Debenture Into ShareIn layman’s terms, converting loan liability into capital liability means or stands for conversion of debentures into shares. After converting debentures into equity shares, the debenture-holder becomes a shareholder. He will get the right to vote. Invested money cannot be refunded without liquidation.It is mandatory to obtain the valuation report from the registered valuer for the conversion of Debentures into Shares.

This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.

Posted by: CA Neetu Saini

AKGVG & Associates

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