Is a valuation report required for the rights issue of a small private company under the Income Tax Act?

Specifically for a rights issue,

1. Under Companies Act, no valuation report is required irrespective of valuation
2. Under the Income Tax Act, if the valuation is on book value method, CA report is sufficient. If on any other method, then valuation by SEBI registered Category 1 Merchant Banker is required.
3. If the subscribers to the Rights Issue are non-resident Indians and the money is to be categorised as Foreign Direct Investment (FDI), then under FEMA laws, either a report from CA ( 10 years experience etc.) or from SEBI Registered Merchant Banker will do.

Since its a private limited Company, we have not mentioned SEBI here.

—— Corporate compliance Team

Entrecap Business Services.

Disclaimer:

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