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FEMA valuation rules govern the price at which shares, compulsory convertible instruments, and other securities can be issued to or acquired from non-residents, and getting the valuation wrong is one of the most common reasons an otherwise well-structured FDI transaction becomes a FEMA violation. Share valuation India FEMA requires that for inbound FDI, shares must be issued at a price not less than the fair value determined by a SEBI-registered merchant banker or chartered accountant using internationally accepted pricing methodology, typically DCF or NAV. For outbound ODI, share valuation India FEMA requires that the price paid by the Indian investor for foreign company shares is not more than the fair value determined by the same methodology. Issuing shares below the minimum price to a foreign investor, or paying above the maximum price for a foreign company’s shares, both violate FEMA valuation rules regardless of what the parties agreed commercially.
Share valuation India FEMA compliance is a mandatory checkpoint, not a commercial formality. The valuation certificate must be obtained before shares are allotted or acquired, must use the prescribed methodology, must be done by a qualified professional, and must be preserved as part of the transaction documentation for RBI reporting. FEMA valuation rules apply across every cross-border investment transaction, FDI into Indian companies, ODI into foreign companies, ESOP grants to NRI employees, rights issue to foreign shareholders, and buyback of shares from non-residents. At Femabide Advisorz, our valuation advisory under FEMA covers the complete compliance requirement, from identifying the applicable valuation methodology and coordinating the valuation exercise to integrating the certificate into the FC-GPR filing and maintaining the documentation trail for future audits. For share valuation India FEMA compliance that stands up to RBI scrutiny, Femabide Advisorz is the specialist advisory firm you need.
