Valuation Under SEBI Regulations
Statutory Provision for Valuation under SEBI (ICDR) - 2018
Preferential issue of shares- in case of frequently traded shares
- Regulation 164 – General case
- Regulation 164A – Stressed Assets
Preferential issue of shares- in case of infrequently traded shares
- Regulation 165
Optional Pricing
- Regulation 164B
Pricing in case of frequently traded shared - Generally
Regulation 164 of SEBI (Issue of share Capital and Disclosure Requirements), 2018
In case of shares listed on the recognized stock exchange for a period > 26 weeks will not be less than higher of the following:
- Average of the weekly high and low of the volume weighted average price during the 26 weeks preceding the relevant date; or
- Average of the weekly high and low of the volume weighted average prices during the 2 weeks preceding the relevant date.
In case of shares listed on the recognized stock exchange for a period < 26 weeks will not be less than higher of the following:
- Price at which equity shares were issued by the issuer in its initial public offer or the value per share arrived at in a scheme of compromise, arrangement and amalgamation; or
- Average of the weekly high and low of the volume weighted average prices during the period the equity shares have been listed preceding the relevant date; or
- Average of the weekly high and low of the volume weighted average prices during the 2 weeks preceding the relevant date
Pricing in exceptional cases
Regulation 164A of SEBI (Issue of share Capital and Disclosure Requirements), 2018
In case of shares listed on the recognized stock exchange for a period > 26 weeks will not be less than higher of the following:
- Price of preferential issue shall not be less than the average of the weekly high and low of the volume weighted average price during the 2 weeks preceding the relevant date.
Regulation 165 of SEBI (Issue of share Capital and Disclosure Requirements), 2018
In case of shares listed on the recognized stock exchange for a period < 26 weeks will not be less than higher of the following:
- Book value
- Comparable multiples
- Other parameters
Optional Pricing in Preferential Issue
Regulation 164B of SEBI (Issue of share Capital and Disclosure Requirements), 2018
In case of frequently traded shares, the price of the equity shares to be allotted pursuant to the preferential issue shall be determined by regulation 164 or regulation 164B. In case of regulation 164B, price shall not be less than the higher of the following:
- Average of the weekly high and low of the volume weighted average prices of the related equity shares quoted the 2 weeks
- Average of the weekly high and low of the volume weighted average price during the 12 weeks preceding the relevant date
When Valuation Report From Registered Valuer is Required?
- Further issue of capital
- Issue of sweat equity shares
- Valuation of transactions entered between specified related party for a consideration other than cash
- Compromise or arrangements with creditors/members
- Merger and amalgamation of companies
- Purchase of minority shareholding
- Creation of security
- Return of allotment
- Valuation of assets as required by Audit Committee
- Valuation of assets and liability as required by liquidators
- Valuation of securities under various provisions of IBC, 2016