Fundraising & Deal

Valuation Report Format (Rule 11UA)

A valuation is an opinion supported by a method, not a number. State the standard of value, the premise, the date, and every material assumption — a report whose conclusion cannot be traced back through its own workings will not survive scrutiny.

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[HEADER — replace with your organisation’s letterhead, if used]

Valuation Report

Fair value of the equity shares of [COMPANY NAME]

Item	Detail
Report addressed to	The Board of Directors, [COMPANY NAME]
Subject of valuation	[Equity shares of face value ₹ ______ each / compulsorily convertible preference shares]
Purpose	[e.g. Preferential allotment under Section 62(1)(c) of the Companies Act, 2013 / determination of fair market value for the purposes of the exchange control pricing guidelines / issue of employee stock options]
Valuation date	[DATE]
Report date	[DATE]
Valuer	[NAME], [Registered Valuer (Securities or Financial Assets) / Chartered Accountant / SEBI-registered Merchant Banker]
Registration number	[IBBI / ICAI / SEBI REGISTRATION NUMBER]
Standard applied	[ICAI Valuation Standards / internationally accepted pricing methodology on an arm’s length basis]
Premise of value	Going concern
Basis of value	Fair value
Conclusion	₹ [VALUE] per [share]

1. Instructions and Purpose

1.1We have been instructed by [COMPANY NAME] (the "Company") to determine the fair value of its [equity shares] as at [DATE] (the "Valuation Date") for the purpose stated above.

1.2This report has been prepared solely for that purpose and for the addressee. It is not to be used, circulated, quoted or relied on for any other purpose or by any other person, and we accept no responsibility to any other person, without our prior written consent. In particular, this report is not a fairness opinion, is not investment advice, and does not constitute a recommendation to any person to buy, sell or hold any security.

1.3Where this report is required to be filed with, or produced to, any authority, it may be so produced without further consent, on the basis that our responsibility remains limited as stated in this Section and in Section 6.

2. Scope, Sources and Procedures

2.1We have relied on the information listed in Annexure A, comprising the audited financial statements for the [3] financial years ended [DATE], the management accounts to [DATE], the projections prepared by management for the [5] years ending [DATE], the capitalisation table, the constitutional documents, the terms of every class of security outstanding, and the discussions with management recorded in Annexure B.

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Preview of the first page. Highlighted fields are the ones you fill in — they appear the same way in Word. Scroll the preview to read on; the full document runs to 11 pages.

Notes for use

These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.

Who may sign, and for what purpose

The qualification required depends on the purpose. A preferential allotment under the Companies Act requires a report from a registered valuer registered with the Insolvency and Bankruptcy Board of India for the asset class securities or financial assets. The exchange control pricing floor requires a certificate from a chartered accountant, a SEBI-registered merchant banker or a practising cost accountant, applying any internationally accepted pricing methodology on an arm’s length basis. These are different requirements and one person may not satisfy both. Where the round involves a non-resident investor and a preferential allotment, expect to need two reports.

Ninety days

Practice treats an exchange control valuation certificate as stale after ninety days. Time the report so that it is still current on the date of allotment, not merely on the date of the board meeting. A round that slips by a month frequently needs the certificate refreshed.

Purpose drives method

The same company can have several defensible values on the same day depending on the purpose — a fair value for a preferential allotment, a fair market value for exchange control, and a different figure for an option grant. Section 1 must state the purpose precisely, because the report is only usable for that purpose.

Projections belong to management

Clause 2.2 is not boilerplate. The valuer reviews projections for reasonableness; management owns them. Obtain a management representation letter confirming the projections and the completeness of the information, and list it in Annexure A. Without it the valuer is exposed and the report is weaker.

Terminal value dominates — disclose how much

In an early-stage discounted cash flow, the terminal value is typically seventy to ninety per cent of the enterprise value, which means the conclusion is driven almost entirely by two assumptions: the terminal growth rate and the discount rate. Section 5.3 asks for the terminal value as a percentage of enterprise value precisely so the reader can see this, and Section 5.5 shows the sensitivity. A report that hides this is not a useful report.

The company-specific risk premium is where judgment hides

Adding several percentage points of unexplained company-specific risk is the easiest way to reach a predetermined answer. Identify each factor — customer concentration, key person dependency, limited operating history, single-product exposure — and attribute a component of the premium to each. An unexplained premium is the first thing a reviewer will challenge.

A recent arm’s length round is powerful evidence

Where the company has closed a genuine priced round with an unconnected investor within the last few months, that price is strong evidence of fair value and should be given substantial weight in the reconciliation, or the report should explain why it has not been. Ignoring a recent round while reaching a materially different figure invites challenge.

Allocate between classes, do not divide

Where preference shares carry a liquidation preference, the equity value does not divide evenly across the fully diluted share count. The preference has value and the common shares have less. Annexure C requires an allocation. For option valuations in particular, dividing equity value by fully diluted shares overstates the value of the common stock and understates the option gain.

Angel tax no longer drives the number

Section 56(2)(viib) of the Income-tax Act, 1961 was omitted with effect from assessment year 2025-26 and has not been re-enacted. Valuations no longer need to be defended against a charge on the company for issuing above fair market value. The company law and exchange control requirements are unaffected, and a valuation remains necessary for both.

Independence and contingent fees

Clause 6.4. A fee contingent on the conclusion, or on the transaction completing, compromises the report and may breach the valuer’s professional obligations. Where the valuer has any other relationship with the company, disclose it.

Show the workings

A conclusion with no visible arithmetic is not a valuation report, it is an assertion. Sections 5.1 to 5.6 are laid out so that a reader can follow the chain from revenue projection to value per share and test each link. Attach the model where the addressee will want it.

Unique document identification

Where the signatory is required by the professional body to generate a unique document identification number for the certificate, generate it and record it on the signature block. A report without it may be rejected.

Current as of

Reflects Indian law and valuation practice current as of {{DATE OF USE}}. Qualification requirements and the exchange control pricing framework change — confirm who may sign, and under what standard, before commencing work.

This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, company secretary, or chartered accountant as relevant) before you rely on it.