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184 Corporate Finance BRILLIANT’S

Valuation of Shares eo¶g© H$m ‘yë¶m§H$Z
According to Meigs W.B., "The unit of cor- ‘r½g S>ãë¶y ~r. Ho$ AZwgma, ''H$m°nm}aoQ> Am°Za{en
porate ownership is a share or stock." H$s BH$mB© EH$ eo¶a ¶m ñQ>m°H$ h¡&''
According to Pickles, “from accounting {nH$ëg Ho$ AZwgma, ''AH$mC§qQ>J Ho$ Ñ{ï>H$moU go
point of view valuation of shares is a difficult eo¶g© H$m ‘yë¶m§H$Z EH$ H${R>Z g‘ñ¶m h¡& ¶Ú{n {Z{X©ï>
problem. Though the underlying principles are
by no means difficult but their application calls {gÕm§V A~ H${R>Z Zht aho h¢ {H$ÝVw CZHo$ AZwà¶moJ
for a considerable knowledge of technical VH$ZrH$s q~XþAm| Ho$ ‘hÎdnyU© kmZ H$s Amdí¶H$Vm na
points.” ~b XoVo h¢&''
An amount is noted on each share of a com- EH$ H§$nZr Ho$ à˶oH$ eo¶a na EH$ am{e {bIr OmVr
pany, this is known as face value of the shares. h¡, Bgo eo¶g© H$s ’o$g d¡ë¶y H$hm OmVm h¡& EH$ H§$nZr Zo
A company has issued 10,000 shares of ` 10
< 10 à˶oH$ Ho$ 10000 eo¶g© Omar {H$¶o h¢, Bg pñW{V
each in this case the amount of ` 10 is the face ‘| < 10 H$s am{e eo¶a H$s ’o$g d¡ë¶y h¡ VWm Bgo nma
value of the share and it is also called par value.
Market price of the share may be less or more d¡ë¶y ^r H$hm OmVm h¡& eo¶a$ H$m ~mOma ‘yë¶ eo¶a H$s
than the face value of the share. ’o$g d¡ë¶y go H$‘ ¶m A{YH$ hmo gH$Vm h¡&
Need for Valuation of Shares eo¶g© Ho$ ‘yë¶m§H$Z H$s Amdí¶H$Vm
The need for valuation may arise in any of ‘yë¶m§H$Z H$s Amdí¶H$Vm {ZåZ{b{IV ‘| go {H$gr
the following situations: n[apñW{V ‘| CËnÝZ hmo gH$Vr h¡…
1. Amalgamation, merger, demerger: In 1. E‘mëJ‘oeZ, ‘O©a, {S>‘O©a… ¶{X Xmo H§$nZrO Ho$
case there is amalgamation or merger between ~rM E‘mëJ‘oeZ ¶m ‘O©a hmoVm h¡ ¶m EH$ H§$nZr Xÿgao H$mo
two companies or if one company acquires an- E³dm¶a H$aVr h¡ Vmo E‘mëJ‘oqQ>J ¶m E³dm¶S>© H§$nZr BgH$s
other company, the amalgamating or the ac-
quired company loses its identity nhMmZ Imo XoVr h¡ VWm Bg{bE E‘mëJ‘oqQ>J
and so the shareholders of amal- H§$nZr Ho$ eo¶ahmoëS>g© H$mo Z¶r E‘mëJ‘oQ>oS>
Need for Valuation
gamating company are compen- of Shares H§$nZr ‘| eo¶g© Ho$ ê$n ‘| j{Vny{V© H$s
sated in the form of the shares in OmVr h¡& eo¶g© Ho$ ‘yë¶m§H$Z Ho$ AmYma na
the new amalgamated company. 1. Amalgamation, mer-
An exchange ratio is determined ger, demerger EH$ E³gM|O aoemo H$m {ZYm©aU {H$¶m OmVm
on the basis of valuation of shares. 2. Dissenting Sharehold- h¡&
2. Dissenting Shareholders: ers 2. {S>g|qQ>J eo¶ahmoëS>g©… E‘mëJ‘oeZ
In the process of amalgamation or 3. Conversion ¶m H¡${nQ>b [añQ´>³M[a¨J Ho$ {H$gr àH$ma
any form of capital restructuring, 4. Buy-Back H$s à{H«$¶m ‘| H$B© ~ma Hw$N> eo¶ahmoëS>g©
at times some of the shareholders 5. Nationalization /
do not approve the scheme, these Compulsory acquisi- ¶moOZm H$mo ñdrH$ma Zht H$aVo h¢, ¶o
shareholders are known as dis- tion by Government eo¶ahmoëS>g© {S>g|qQ>J eo¶ahmoëS>g© H$hbmVo
senting shareholders. These un- 6. Wealth disclosure h¢& BZ A{ZÀNw>H$ eo¶ahmoëS>g© H$mo CZHo$
willing shareholders are required 7. Takeovers Ûmam aIo J¶o eo¶g© Ho$ {bE ZJX ‘| {ZnQ>mam
to be settled in cash for the shares 8. Unlisted shares H$aZm Amdí¶H$ hmoVm h¡& AV… eo¶g© Ho$
held by them. Therefore, the need 9. To avail Secured
for the valuation of shares arises ‘yë¶m§H$Z H$s Amdí¶H$Vm Bg n[apñW{V ‘|
Loans
in this situation. CËnÝZ hmoVr h¡&