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iica.230222.valuation-of-shareholders-rights - Coggle Diagram
iica.230222.valuation-of-shareholders-rights
CA2013
CA overrides SHA, AOA & MOA (Sec 6)
contrary provisions are not enforceable
SOV
FV
Discounts/Premiums DO NOT apply
FMV
Discounts/Premiums APPLY
Features-of-SHA
not mandatory by law
restriction on transfer is valid
matters related to subject company
company need not be party
terms can be incorporated into AOA
subject to indian contract act
cannot override the legal and fiduciary duties of the shareholders and directors
rights addition to provided as per CA
key terms
management
board representations
quorums
appointment rights
communication
info & audit rights
confirmation rights (business plans, projections)
control, veto, positive consents
minority rights - veto - positive/negative lists
lock-in, non-compete
take-over code
protecting family control
ownership - share trf issues
buybacks
right of refusals
TAG along
DRAG along
call-put option at pre-determined price
pre-emption rights
enforceability of SHA
power of BOD to hold transfer
pre-emptive rights of shareholders
enforceable if SHA key terms incorporated in AOA
any restriction on the transferability of shares which is not in the AOA of the company is not binding on the company or its shareholders
proviso of Section 58(2), principles of contract law will apply
Valuation considerations
degree of marketability
degree of control
Discounts – which reduce the value of interests in closely held companies (usually minority interests)
degree of transferability
Marketability & DLOM
inversely related (premiums)
put options
high dividends
size of equity interest (lesser the interest higher the DLOM)
potential buyers
prospect of IPO
speed and ease of sale of equity (discounts)
notice period
pre-emption
right of refusal
lender agreement/pledge
JVA
pooling agreement
FEMA pricing guidelines; Sec 62(1)(c) of Companies Act, 2013