Which report do I need to issue shares to investors?

For a preferential allotment or private placement under the Companies Act - the route most startup funding rounds use - the issue price must be justified by a Registered Valuer's report. The report feeds the board and shareholder resolutions and the PAS-3 filing. A report signed by a CA who is not a Registered Valuer, or by a merchant banker alone, does not satisfy the Companies Act requirement.

Can my regular CA sign my startup's valuation report?

Not for Companies Act purposes, unless that CA is also an IBBI Registered Valuer in the Securities or Financial Assets class. Being a chartered accountant alone does not authorise signing Section 247 valuations - this is the single most common and most expensive confusion, usually discovered by the investor's counsel mid-deal.

Who signs the valuation for foreign investment (FEMA / FC-GPR)?

FEMA pricing guidelines require the price of shares issued to or transferred involving a person resident outside India to be supported by a valuation as per internationally accepted pricing methodology, certified by a prescribed professional. The practical approach is to align the FEMA valuation with the Companies Act Registered Valuer report so one defensible number supports both the FC-GPR filing and the corporate approvals.

What happens if I file with the wrong valuer's report?

The report is invalid for that purpose - which can taint the allotment it supported, expose officers who relied on it, invite questions on the ROC filing, and stall the deal while a compliant report is commissioned under time pressure. Fixing it retrospectively costs more than getting the right signature the first time.

Can one report cover Companies Act, FEMA and tax purposes together?

Sometimes partially, never automatically. The Companies Act and FEMA valuations can usually be aligned to a single number. Income-tax valuations follow their own prescribed methods and, for certain purposes, their own class of valuer. The efficient sequence is to map every purpose the transaction touches at the start and commission the right report(s) once - which is exactly how we scope a valuation engagement.

Does Startup Advisory provide Registered Valuer reports?

Yes - the practice is led by CA Neeraj Rohilla, IBBI Registered Valuer in the Securities or Financial Assets class, working from Saket, New Delhi. Valuations for preferential allotment, CCPS/CCD issues, sweat equity, mergers, IBC and FEMA-aligned pricing, integrated with due diligence and the rest of the fundraise. Call 9311972982.

Company & Compliance

Registered Valuer vs Merchant Banker: Which Valuation Report Does Your Startup Need?

Q: When is a merchant banker's valuation required?

Certain valuations under the income tax rules are reserved for SEBI-registered merchant bankers - historically the DCF valuation for angel tax, and the fair market value of unlisted shares for ESOP perquisite taxation. With angel tax abolished from FY 2025-26, the merchant-banker requirement on genuine startup fundraises has narrowed considerably - but ESOP perquisite valuation and certain other income-tax valuations still sit with merchant bankers. Map the purposes before commissioning.

Q: Did the abolition of angel tax remove the need for valuation reports?

No - it removed one tax-side trigger, not the company-law side. Angel tax (old Section 56(2)(viib)) is abolished from FY 2025-26, so the income-tax pressure on issue pricing has eased. But the Companies Act still requires a Registered Valuer's report for preferential allotments, FEMA still requires pricing support for foreign investors, and the IBC still requires Registered Valuers. The valuation obligation moved; it did not disappear.

Q: Who does IBC valuations during insolvency?

Registered Valuers - the insolvency framework requires Registered Valuers in the relevant asset classes to determine fair value and liquidation value during CIRP. Merchant bankers have no role in this requirement. For shares and financial assets, the Securities or Financial Assets class applies.

By CA Anuj Negi, ACA · Startup Advisory, Saket, New Delhi · Updated 22 August 2026

Registered Valuer vs merchant banker valuation report comparison for Indian startups 2026

In a nutshell: India does not have one “valuation report.” The Companies Act, FEMA, the income tax rules and the IBC each prescribe who may sign the valuation for which purpose — and a report signed by the wrong professional is invalid for that purpose, however good its analysis. For the transactions most startups actually do — issuing shares to investors — the Companies Act demands an IBBI Registered Valuer (Securities or Financial Assets class). Merchant bankers own a narrower, tax-side territory. This guide maps every common purpose to the right signature.

Why the signature matters more than the number

Founders tend to shop for a valuation the way they shop for a logo: find someone competent, get a professional-looking PDF, attach it to the filing. The law does not work that way. Each statute names the class of professional whose signature makes the report legally effective for that statute’s purpose. A brilliant DCF signed by the wrong professional is, for the filing it supports, worth exactly nothing — and the officers who relied on it carry the exposure.

The confusion is understandable because three different regimes use similar language. Untangling them takes one table.

The two professionals, defined

A Registered Valuer (RV) is an individual registered with the Insolvency and Bankruptcy Board of India under Section 247 of the Companies Act, 2013 read with the Companies (Registered Valuers and Valuation) Rules, 2017 — in a specific asset class. For shares, securities, convertibles and financial assets, the relevant class is Securities or Financial Assets (SFA). Registration is granted to the individual after prescribed qualifications, a valuation examination and membership of a Registered Valuers Organisation. Because registration is individual, what matters on your report is who signs, not which firm’s letterhead it carries.

A merchant banker is a company holding a SEBI Category I merchant banker registration. Merchant bankers run public issues and open offers, but the reason they appear in valuation conversations is narrower: certain income tax rules specifically prescribe a merchant banker’s certificate for particular fair market value determinations of unlisted shares.

Two registrations, two regulators, two bodies of law. Neither substitutes for the other where a statute names one specifically.

Purpose-by-purpose: who signs what

Purpose	Who must sign	Legal basis
Preferential allotment / private placement (equity, CCPS, CCD) — the standard startup funding round	Registered Valuer (SFA)	Companies Act — issue price justified by an RV report; feeds resolutions and PAS-3
Sweat equity & shares for consideration other than cash	Registered Valuer	Companies Act
Mergers, demergers, schemes of arrangement	Registered Valuer	Companies Act — share-exchange ratios and scheme valuations
Non-cash transactions with directors; minority buy-outs	Registered Valuer	Companies Act
IBC — fair value & liquidation value in CIRP / liquidation	Registered Valuers (in relevant asset classes)	Insolvency framework
FEMA — shares issued to / transferred involving foreign investors (FC-GPR pricing)	Prescribed professional certifying internationally accepted pricing methodology — in practice aligned with the RV report	FEMA pricing guidelines (NDI Rules)
ESOP perquisite — FMV of unlisted shares for taxing the employee’s benefit	Merchant banker	Income tax rules
Angel tax DCF (old Section 56(2)(viib))	Historically merchant banker — abolished from FY 2025-26	Income tax (no longer applicable to issues)

The classic trap: “our CA will do the valuation.” A chartered accountant who is not an IBBI Registered Valuer cannot sign a Companies Act valuation — full stop. This surfaces at the worst possible moment: the investor’s counsel reviews the data room, flags the report, and the closing waits while a compliant valuation is commissioned under deadline pressure. Ask one question before engaging anyone: “Are you an IBBI Registered Valuer in the Securities or Financial Assets class, and will you be signing?”

What changed with angel tax — and what didn’t

The abolition of angel tax (old Section 56(2)(viib)) from FY 2025-26 removed the most notorious merchant-banker touchpoint for startups: the DCF certificate that justified issue premiums to the tax department. That is a genuine simplification — the income-tax pressure on issue pricing has eased substantially.

What it did not change: the Companies Act still requires a Registered Valuer’s report for the allotment itself; FEMA still requires pricing support where a foreign investor participates; ESOP perquisite valuation still follows the income tax rules’ prescription; and the IBC’s RV requirement is untouched. The valuation obligation did not disappear — its centre of gravity shifted decisively toward the Registered Valuer.

The alignment problem: one deal, several regimes

A typical priced round with a foreign investor touches at least two regimes at once — Companies Act (the allotment) and FEMA (the pricing floor for the FC-GPR). Run these as separate exercises and you can end up with two different numbers in two filings for the same transaction: a discrepancy every reviewer notices and none forgives. The professional approach is to map every purpose first, then produce aligned reports so a single defensible number runs through the board resolution, the valuation report, the PAS-3 and the FC-GPR. Where a genuinely separate report is prescribed (say, a merchant banker’s ESOP FMV), it is commissioned knowingly — not discovered at filing time.

How to choose, in three questions

1. What is the transaction? Issuing or transferring shares, merging, buying out minorities → Companies Act territory → Registered Valuer. 2. Who is on the other side? A non-resident anywhere in the deal → FEMA pricing applies on top → align the reports. 3. Is there a tax-specific purpose? ESOP perquisites or other prescribed FMV determinations → check whether the income tax rules name a merchant banker for that specific purpose. Answer those three and the professional chooses itself — which is precisely the mapping we run at the start of every valuation engagement.

Where we fit: Startup Advisory’s valuation practice is led by CA Neeraj Rohilla, IBBI Registered Valuer (Securities or Financial Assets) — so the Companies Act report, the FEMA alignment, the due diligence and the allotment paperwork run on one desk in Saket, New Delhi. Call 9311972982.

Frequently Asked Questions

A Registered Valuer is an individual registered with the IBBI under Section 247 of the Companies Act in a specific asset class (for shares: Securities or Financial Assets) and signs the valuations the Companies Act and IBC require. A merchant banker is a SEBI-registered Category I intermediary whose certificate certain income tax rules prescribe. Different registrations, different regulators, different laws — neither substitutes for the other where a statute names one.

For a preferential allotment or private placement — the route most funding rounds use — a Registered Valuer’s report justifying the issue price. It feeds the resolutions and the PAS-3. A report from a non-RV CA or a merchant banker alone does not satisfy the Companies Act.

Not for Companies Act purposes, unless that CA is also an IBBI Registered Valuer in the SFA class. A CA qualification alone does not authorise Section 247 valuations — the most common and most expensive confusion in startup fundraising.

For specific income-tax valuations — historically the angel tax DCF, and the FMV of unlisted shares for ESOP perquisite taxation. With angel tax abolished from FY 2025-26, the merchant-banker footprint on genuine startup rounds has narrowed considerably, but it has not vanished. Map the purposes before commissioning.

FEMA pricing guidelines require certification of internationally accepted pricing methodology by a prescribed professional. The practical approach is aligning the FEMA valuation with the Companies Act RV report so one defensible number supports the FC-GPR and the corporate approvals.

No — it removed one tax-side trigger. The Companies Act still requires an RV report for the allotment, FEMA still requires pricing support for foreign investors, and the IBC still requires Registered Valuers. The obligation shifted toward the Registered Valuer; it did not disappear.

The report is invalid for that purpose — tainting the allotment it supported, exposing the officers who relied on it, inviting ROC questions and stalling the deal while a compliant report is commissioned under pressure. The right signature the first time is always cheaper.

Partially, never automatically. Companies Act and FEMA valuations can usually align to one number; income-tax valuations follow their own methods and, for some purposes, their own valuer. Map every purpose first, commission the right report(s) once.

Registered Valuers — the insolvency framework requires RVs in the relevant asset classes to determine fair value and liquidation value during CIRP. Merchant bankers have no role in this requirement.

Yes — the practice is led by CA Neeraj Rohilla, IBBI Registered Valuer (Securities or Financial Assets), from Saket, New Delhi: preferential allotment, CCPS/CCD, sweat equity, mergers, IBC and FEMA-aligned valuations, integrated with due diligence and the full fundraise. Call 9311972982.

About the author: CA Anuj Negi, ACA

Chartered Accountant, Startup Advisory — Saket, New Delhi

CA Anuj Negi is an Associate Chartered Accountant (ACA) at Startup Advisory who focuses on accounting, bookkeeping and ongoing tax compliance — cloud bookkeeping, GST and TDS, income-tax audit and compliance for Delhi NCR businesses.

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