A buy-out order under Section 242(2)(b) requires a valuation of the petitioner’s shares. The valuation is the most contested issue in an oppression buy-out, and the NCLT’s approach has evolved through the NCLAT’s decisions.
The Valuation Date
The valuation must reflect the company’s value as of the date of the buy-out order, or as close to it as the circumstances permit. The NCLAT has set aside a buy-out order based on a valuation report that was several years old, holding that the valuation was outdated and that the matter required a fresh valuation.
The Valuation Evidence
The petitioner and the respondent may each produce a valuation report, and the NCLT may appoint an independent valuer. The NCLAT has upheld the Swiss Challenge method as a valid share-valuation tool, particularly in family disputes where the parties have irreconcilable differences.
The Standard
The NCLT does not substitute its own valuation for the valuer’s, but it will reject a report that is not supported by the methodology or the assumptions. The Tribunal’s task is to determine the fair value, and it will examine the valuer’s independence, the methodology, and the assumptions.
A technically sound buy-out valuation is current, supported by the company’s financial data, and conducted by an independent valuer using a recognised methodology.
Call to Action
Anuj Desai & Associates advises petitioners and companies on the valuation in an oppression buy-out—from the valuation date and the evidence to the Swiss Challenge method and the NCLT scrutiny. If you are involved in a buy-out valuation dispute, we can help you build the record.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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