Prepared by Marcken Consulting | July 2026

Valuation Report for Private Placement of Shares: Is a Registered Valuer Mandatory?

Short answer: Yes — in almost every case that matters. If your private placement involves equity shares, or any security convertible into equity, and your company is unlisted, the issue price must be determined by the valuation report of an IBBI-registered valuer under Section 62(1)(c) of the Companies Act, 2013 read with Rule 13(1) of the Companies (Share Capital and Debentures) Rules, 2014. The report must exist before the offer letter is circulated, not after the price is agreed. Listed companies, pure non-convertible debentures, rights issues, bonus issues and ESOP allotments are the main exceptions.

This article focuses specifically on the Section 62(1)(c) mechanics: the two-minute answer, the exact sequence and deadline that most companies miss, and what a defensible report must contain. If your transaction also involves a non-resident investor or you are trying to work out which of several valuation reports your round actually needs, see our companion guide, Which Valuation Report Do You Need? A Decision Guide for Founders and CFOs, which covers FEMA, Income Tax, SEBI and IBC valuation requirements side by side.

1. The Two-Minute Answer

Type of Issue	RV Report Required?	Governing Provision
Equity shares to identified investors (unlisted company)	Yes	Sec. 62(1)(c) + Rule 13(1), SCD Rules
CCPS, CCDs, convertible warrants (unlisted company)	Yes	Sec. 62(1)(c) + Rule 13(1), SCD Rules
Shares for consideration other than cash	Yes — plus a second RV report on the consideration itself	Rule 12(5), PAS Rules (attach to PAS-3)
Preferential allotment by a listed company	No RV report — SEBI ICDR pricing formula applies instead	Proviso to Rule 13(1), SCD Rules
Non-convertible debentures	No	Outside Rule 13 — no equity conversion
Rights issue	No	Sec. 62(1)(a)
Bonus issue	No	Sec. 63
ESOP allotment to employees	No RV report for the allotment — a separate ESOP valuation applies instead	Sec. 62(1)(b)
Issue to a non-resident investor	Yes — plus a separate FEMA valuation	Rule 21, NDI Rules, 2019

That last row is where most companies get caught — see Section 4 below for why one report is not enough, and our decision guide for the full FEMA framework.

2. The Statutory Mandate: Why Section 42 Alone Is the Wrong Answer

Companies routinely assume a private placement is governed only by Section 42. It is not.

Section 42 governs the process — the offer letter in Form PAS-4, the record in Form PAS-5, the 200-person cap, the separate bank account, allotment within 60 days, and the return of allotment in Form PAS-3.

The pricing mandate comes from elsewhere. The moment your private placement is made to identified persons on preferential terms and involves equity or convertible securities, it is also a preferential allotment. Section 62(1)(c) permits such an issue only if the price of the shares is determined by the valuation report of a registered valuer, subject to compliance with the applicable provisions of Chapter III. Rule 13(1) of the Companies (Share Capital and Debentures) Rules, 2014 carries this through, and the valuation report must be made prior to the circulation of the offer letter.

Section 42 then reinforces it from the disclosure side. Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 requires the explanatory statement annexed to the special resolution notice to disclose the basis or justification for the price, including any premium, and the name and address of the valuer who performed the valuation.

Two further points are widely missed.

2.1 Consideration other than cash

Where securities are issued for non-cash consideration, a registered valuer’s report in respect of the valuation of the consideration must also be attached to Form PAS-3. That is a second report — one valuing the shares, one valuing what the company receives. Issuing shares against intellectual property, machinery, or a loan conversion without it is a live non-compliance.

2.2 Section 247

The valuer must be registered under Section 247 of the Companies Act, 2013 with the IBBI, for the asset class Securities or Financial Assets. A Chartered Accountant who is not an IBBI-registered valuer cannot sign this report, however senior. See our guide to Registered Valuers in India for the full scope of what the role covers.

3. Sequencing the Valuation — The Step Most Companies Get Backwards

Rule 13 does not fix a statutory “relevant date” for unlisted companies the way SEBI’s ICDR Regulations do for listed ones. Under Regulation 161 of the SEBI (ICDR) Regulations, 2018, a listed company’s preferential-issue floor price is anchored to a relevant date defined as 30 days prior to the general meeting — but that pricing formula is specific to listed companies pricing off VWAP. It is not the rule that governs an unlisted company’s Section 62(1)(c) valuation.

For an unlisted company, Rule 13(1) simply requires the price to be determined by the valuation report of a registered valuer before the offer is made, and the explanatory statement to the special resolution must disclose that basis. There is no separate 30-day pre-meeting valuation deadline for a straightforward cash issue of equity shares. The one place a specific timing window does appear is for convertible securities (CCPS, CCDs, warrants with a later conversion right): Rule 13(1) allows the company to fix the conversion price either upfront, based on the valuation report given at the time of the offer, or later — not earlier than 30 days before the holder becomes entitled to convert, based on a valuation report issued no earlier than 60 days before that date. That window is specific to deferred conversion pricing, not a universal rule for every preferential allotment.

In practice, the sequence that keeps a straightforward cash issue defensible is:

1. Board resolution proposing the issue and identifying the allottees.
2. Registered valuer report obtained, dated before the offer is made and before the price is disclosed to allottees.
3. Notice of general meeting with explanatory statement referencing the valuation and the valuer.
4. Special resolution passed; Form MGT-14 filed within 30 days.
5. Form PAS-4 offer letter circulated to identified persons.
6. Application money into a separate bank account; allotment within 60 days of receipt.
7. Form PAS-3 filed within 15 days of allotment, with the consideration valuation report where applicable.

A report obtained at step 5, after the price has been decided, is a compliance record, not a valuation. It invites exactly the scrutiny it was meant to prevent. Where the issue involves convertible securities and the company elects to fix the conversion price later rather than upfront, the 30-day/60-day window described above applies and should be tracked separately.

Want the 7-step sequence above as a one-page compliance calendar? Email Marcken Consulting and we will send it across.

Website: marckenconsulting.com
Marcken Consulting LLP — IBBI-Registered Valuer (Securities or Financial Assets)
Phone: +91 99980 59923 / +91 99985 39902
Email: crm@marckenconsulting.com

4. If a Non-Resident Investor Is Involved, You Need a Second Report

An IBBI Registered Valuer report fixes the price under Section 62(1)(c) for Companies Act purposes. It does not satisfy FEMA. If any allottee is a person resident outside India, Rule 21 of the FEMA (Non-Debt Instruments) Rules, 2019 separately requires the price to be certified by a Chartered Accountant, a SEBI-registered Merchant Banker, or a practising Cost Accountant, using an internationally accepted pricing methodology.

The two regimes apply simultaneously, and the two reports should be built off one consistent valuation model — contradictory numbers across the RV report and the FEMA certificate are one of the most common causes of FC-GPR queries at the AD bank. For the full mechanics — the FEMA pricing floor, the 90-day validity window, and which professional certifies what — see Which Valuation Report Do You Need?

Raising a foreign-funded round? Marcken Consulting offers a no-charge 30-minute consultation to map the exact reports your round needs, off one consistent model, before pricing gets locked.

Website: marckenconsulting.com
Marcken Consulting LLP — IBBI-Registered Valuer (Securities or Financial Assets)
Phone: +91 99980 59923 / +91 99985 39902
Email: crm@marckenconsulting.com

5. Does Angel Tax Still Apply to Private Placements?

No — not for issues from 1 April 2025 onwards. Section 56(2)(viib) of the Income Tax Act, 1961, the “angel tax” provision that once required a Rule 11UA valuation for every premium share issue, was abolished by the Finance Act, 2024 with effect from Assessment Year 2025-26. If a consultant is still telling you that your 2026 primary round needs an angel tax valuation, they are working from stale material.

Rule 11UA valuations remain relevant for other purposes — secondary transfers and gifts under Section 92(2)(m) of the Income-tax Act, 2025 (the successor to Section 56(2)(x)) and Section 50CA — but not for pricing a fresh private placement itself. For the full position, including the legacy assessment years still open to challenge, see our dedicated post, Angel Tax Is Gone. Startup Valuation Reports Are Not.

6. What a Defensible Registered Valuer Report Must Contain

A report that survives scrutiny states, at minimum:

1. The statutory purpose and the specific provision relied upon.
2. The valuation date, and confirmation that it precedes the offer price being disclosed to allottees.
3. The standard of value — fair value, fair market value, or otherwise.
4. The information relied upon, and what was not independently verified.
5. The methodology selected, and why alternatives were rejected.
6. Key assumptions — revenue growth, margins, discount rate, terminal growth, comparables and their sources.
7. Discounts and premiums applied (DLOM, minority, control), with quantified support rather than assertion.
8. Sensitivity analysis on the two or three assumptions that drive the answer.
9. The conclusion, expressed as value per share, and the class of security it attaches to.
10. Registration number, signature, and independence declaration.

For companies with CCPS, CCDs or warrants carrying liquidation preferences, simply dividing equity value by share count produces the wrong number. Value must be allocated across classes, typically through an option-pricing or waterfall model. A single-price report for a multi-class cap table is a defect, not a simplification.

7. Five Mistakes That Cost Companies Real Money

1. Engaging a Chartered Accountant who is not an IBBI Registered Valuer for a Section 62(1)(c) issue. The report is not valid for the statutory purpose.
2. Obtaining the report after the price is agreed. It converts an independent valuation into a rubber stamp.
3. Obtaining the valuation report after the offer price has already been disclosed to allottees, or (for convertible securities priced at conversion) valuing outside the required 30-day/60-day window.
4. Relying on the RV report for a FEMA filing, or letting the RV and FEMA numbers diverge.
5. Reusing last year’s report for a new round after a material funding event, contract win, or projection reset.

8. Frequently Asked Questions

Is a valuation report mandatory for every private placement?

No. It is mandatory where equity shares or convertible securities are issued by an unlisted company, that is, where the issue is also a preferential allotment under Section 62(1)(c). It is not required for an issue of non-convertible debentures, since NCDs do not involve conversion into shares, and listed companies follow SEBI’s ICDR pricing formula instead.

Can a Chartered Accountant issue the valuation report?

Only if that Chartered Accountant is registered with the IBBI as a Registered Valuer for Securities or Financial Assets under Section 247. Membership of ICAI alone is not sufficient for this purpose.

Is there a “relevant date” requirement for a private placement valuation?

The 30-days-before-the-general-meeting “relevant date” is a SEBI ICDR pricing rule for listed companies, not a Rule 13 requirement for unlisted companies. An unlisted company simply needs the registered valuer’s report obtained before the offer price is disclosed to allottees. A 30-day/60-day window does apply specifically where convertible securities are priced at the time of conversion rather than upfront.

How long is a valuation report valid?

The Companies Act does not fix an expiry for a Rule 13 valuation, but it must still reflect current facts as at the offer date. For FDI transactions under FEMA, the valuation is valid for 90 days. As a matter of practice, treat any report older than 90 days as stale for either purpose.

Is a valuation report needed for issuing shares against a loan conversion?

Yes — two of them. One for the shares, and a registered valuer’s report on the valuation of the consideration, to be attached to Form PAS-3.

What happens if we allot shares without a valuation report?

The allotment is exposed to challenge on pricing, directors face scrutiny under Section 62, and where a non-resident is involved the FEMA pricing breach can be compounded, with penalties of up to three times the amount involved.

Need Help With Your Private Placement Valuation?

Marcken Consulting is an IBBI Registered Valuer (Securities or Financial Assets), Registration No. IBBI/RV/07/2021/14408, based in Ahmedabad. Where a transaction also requires a Merchant Banker’s certificate, that certificate is issued by a SEBI-registered Category-I Merchant Banker within the same coordinated engagement.

Planning a round? Marcken Consulting offers a no-charge 30-minute consultation to help you identify the right report and the right sequence before your pricing gets locked.

Website: marckenconsulting.com
Marcken Consulting LLP — IBBI-Registered Valuer (Securities or Financial Assets)
Phone: +91 99980 59923 / +91 99985 39902
Email: crm@marckenconsulting.com