Valuation under FEMA

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Valuation under FEMA

Cross-border investments must meet strict compliance standards under Indian foreign exchange laws. Whether it involves receiving foreign investment into India or making overseas investment from India, transactions must adhere to pricing norms under Valuation under FEMA regulations.

The key requirement is that all investments be made at arm’s length pricing, determined through a fair and internationally accepted valuation methodology.

Applicability of FEMA Valuation

Under Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and Foreign Exchange Management (Overseas Investment) Rules, 2022, valuation norms apply to:

Issue or transfer of shares by Indian companies to or from persons resident outside India
Investment abroad by persons resident in India, including individuals and entities
Acquisition of stake in existing foreign or Indian entities

In all cases, a FEMA valuation report must be obtained from a qualified valuer using internationally recognized methods (such as Discounted Cash Flow, Net Asset Value, or Comparable Company Multiple Method), depending on the nature of the transaction.

Key Features of Valuation under FEMA

Mandatory in both FDI and ODI transactions
Pricing must meet the arm’s length standard
Valuation must be done by a SEBI-registered merchant banker, Chartered Accountant, or Cost Accountant (as applicable)
Report format and methodology must align with RBI and FEMA guidelines
Required at the time of share subscription, transfer, exit, or buyback

Why FEMA Valuation Report Is Crucial

Ensures compliance with RBI and FEMA pricing norms
Prevents penalties for under- or over-valuation
Essential for regulatory filings like FC-GPR, FC-TRS, and ODI Forms
Supports transparency and defensibility of cross-border transactions

Why Choose FEMABIDE Advisorz?

Expert preparation of FEMA valuation reports using globally accepted methods
Seamless coordination with AD Banks, regulators, and stakeholders
Advisory on suitable valuation approach (DCF, NAV, Market Price, etc.)
Complete handholding through FDI/ODI transaction lifecycle

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Need a FEMA-Compliant Valuation Report?

Whether you’re investing into or out of India, we ensure your valuation meets all regulatory requirements under FEMA. Connect with our experts for end-to-end assistance in obtaining your FEMA valuation report and ensuring full compliance with Valuation under FEMA guidelines.

Valuation under FEMA