The following are the circumstances where need for the valuation of shares arises:
1. Where companies amalgamate or are similarly reconstructed, it may be necessary to arrive at the value of shares hold by the members of the company being absorbed or taken over.
2. Where shares are hold jointly by the partners in a company and partnership firm dissolved, it becomes necessary to value of shares.
3. Where a portion of the shares is to be given by a member of proprietary company to another member as the member cannot sell it in the open market, it becomes necessary to certify the fair price of these shares by an auditor.
1. Where companies amalgamate or are similarly reconstructed, it may be necessary to arrive at the value of shares hold by the members of the company being absorbed or taken over.
2. Where shares are hold jointly by the partners in a company and partnership firm dissolved, it becomes necessary to value of shares.
3. Where a portion of the shares is to be given by a member of proprietary company to another member as the member cannot sell it in the open market, it becomes necessary to certify the fair price of these shares by an auditor.
4. When a loan advanced on the security of shares, it becomes necessary to know the value of shares on the basis of which loan has been advanced.
5. When shares are given in a company as gift it may be necessary for the purpose of assessing gift tax, to place a value on the shares.
6. When preference shares or debentures are converted into equity share it becomes necessary to value the equity shares for ascertaining the number of equity shares required to be issued for debentures or preference shares which are to be converted.
7. When equity shareholders are to be compensated on the acquisition of their shares by the government under a scheme of nationalization then it is necessary to value the equity shares.