23 February 2010
Hi I have a 65000 no of shares in a Private limited company. which i wanted to sell now to some one in the company(To other share holders). Comapanies total number of shares are 3,25,00,000 at the face value of Rs.10/-per share. since 5 years company is not giving the dividend or bonus shares. while selling the pvt.company shares how the share valuaiton will be done. I mean will i get the 65000*10=Rs.6,50,0000/-as guarenteed amount which i contributed for shares.Are there any supproting provions for calculation of the share price of private limited company or whatever the amount(share price) decided by the majority share holders or Managing director is final. Please help us with this issue little urgent Thanks in advance
23 February 2010
If you have the balance sheet of the private limited company for the last few years, you can do the valuation yourself on the basis of the following method:
1) NAV (book value) 2) NAV (market price of assets including investments) 3) Discounted Cash Flow 4) Future earning
Take average of the value derived after assigning some weights to all the methods depending on the business activity in the Company.
If the company is not making profits and has low profits, then give equal weightages to all the methods.
There is no assurance that you can get the face value.
If the AOA provides so then the price may be determined by the MD/ majority shareholders. Otherwise, the above method will do.
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