Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
The company-law requirement
When you issue shares by preferential allotment or private placement, Section 62 of the Companies Act requires the price to be backed by a report from an IBBI-registered valuer. This protects existing shareholders by showing the price is fair.
The FEMA and income-tax layers
If a non-resident is investing, FEMA pricing rules require a valuation by a merchant banker or CA at or above fair value. Separately, income-tax Rule 11UA sets the FMV for tax purposes. The same round may therefore touch all three.
Who does what — an example
Consider two rounds. A startup issuing shares to a domestic angel needs a single IBBI-registered valuer report to support the preferential allotment under Section 62. A startup issuing to a foreign fund needs that registered-valuer report and a separate merchant-banker FEMA valuation at or above fair value, after which it files FC-GPR with the RBI. The two certificates serve different masters — one protects existing shareholders under company law, the other protects inbound foreign exchange under FEMA — and a single document rarely satisfies both. Getting the right certificate(s) before you allot is what prevents a rejected ROC filing or a delayed RBI report. Valuation requirements differ by transaction and can change — confirm what your specific round needs. Our startup service arranges the valuations and handles the filings.