07 December 2009
Please give me the details as per Companies Act and SEBI rules for private companies and unlisted public limited companies for determining the value per share during the buy back of shares
07 December 2009
Please refer to the Private Limited Company and Unlisted Public Limited Company (Buy-Back of Securities) Rules, 1999.
There are no valuation rules for determining the buy back price. However, a good governance practices, you should get the shares valued from an independent chartered accountant who values the shares no the basis of NAV(Book Values), NAV(Market Values), Discounted Cash Flow amd Future Earning Capacity Methods. Since the company is unlisted, market price is not readily determinable. Otherwise, even the average of market prices for the last 26 weeks should be considered. All these methods should be given different weightages, depending upon the asset structure, earning capacity and consistency factors.
A value should be determined and recommended to the Board of Directors. The Board of Directors may fix a price around the recommended price.
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