Regulatory Valuation in case of Issue / Transfer of Shares of Unlisted Company

To keep pace with ever evolving economic and business environment, various regulatory bodies in India (RBI, Income Tax, MCA, etc) have prescribed different and in some cases even conflicting valuation methodologies creating practical difficulties. In some cases, absolute discretion is given to valuers on one hand and in other cases strict adherence to practical method like NAV, DFCF, Market price etc is sought. However, in most cases, there is not much guidance on how to apply a particular method like DFCF method, Comparable Companies Multiple Method.

In this article we have made comparative analysis of regulatory valuations prescribed by "RBI, Income Tax Authority and MCA" in case of Issue / Transfer of Shares of Unlisted Company.