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Share valuation

CA Gaurav Ajit Potdar (Chartered Accountant) (846 Points)

24 April 2015

Dear All

We valued the shares of one of our client(shares issued to NR) at around Rs 1300/- a few months back. and co issued the shares on same price.
Now if we value the shares at same amount of Rs 1300/- and issue the the shares at 1700/- per share , whether it can be accepted as per Companies Act,2013 & also under FEMA?

If we value the share at Rs 1700/- today then the question may arise that the earlier share at Rs 1300/- are issued below fair value under FEMA.

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raghava (cs) (43 Points)
Replied 25 April 2015

Dear Mr. Gaurav Ajit Potdar

As per my view

According to Pricing guidelines of recent FEMA FDI Master Circular for Fresh Issue of shares : Price of fresh issue of shares issued to a persons resident outside India under the FDI scheme shall be:

On the basis of SEBI guidelines in case of listed companies
Not less than fair value of shares determined by SEBI registered Merchant Banker or a Chartered Accountant as per any internationally accepted pricing methodology on arm’s length basis

As per the above guidelines the issue price shall not be less than the value derived as per above guidelines, if price derived by C.A is Rs. 1300/- and shares issued at Rs. 1700/- have no problem in my view, you may obtain other professionals/ experts view in this regard.

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