Understanding Merger Valuation Under Section 232

There is no single answer, because validity depends on why the valuation was done. Some rules fix an exact number of days. Others say nothing, and the practical answer comes from how stale a number can get before someone challenges it. Here is how it works for the situations Indian companies meet most often.

The Fixed Windows

FEMA pricing for foreign investment: 90 days. A valuation certificate for an issue or transfer of shares involving a non-resident should not be more than 90 days old on the date of allotment or transfer. There is no extension mechanism. If allotment slips past 90 days, you need a fresh certificate. This is the rule most often missed, because deals that take months to negotiate can outlive their own valuation.

ESOP perquisite valuation on exercise: 180 days. For unlisted companies, the fair market value used to tax the employee's perquisite on exercise is certified by a SEBI-registered Category I merchant banker, and the certificate is generally treated as valid for 180 days. The new Income-tax Rules, 2026 renumbered this area, so confirm the current rule number with your tax advisor.

409A valuations in the US: up to 12 months. A valuation by a qualified independent appraiser is presumed reasonable for up to 12 months, but only if nothing material has happened since. A new funding round, an acquisition offer, or a major change in results can end the presumption early.

Where the Rule Gives No Number

Companies Act valuations. The Companies Act does not prescribe a validity period for a registered valuer's report. That does not mean the report lasts forever. It is tied to a valuation date and should be current enough to support the transaction it is used for, such as a preferential allotment, buyback, or scheme of arrangement. Many practitioners use about 90 days as a working limit, but that is practice, not statute.

SEBI-governed transactions. For preferential allotments by listed companies, sources conflict on the period, with some citing 60 days under the ICDR Regulations and others saying exchanges commonly accept reports up to 90 days old. Check the current regulation and the exchange's requirements before relying on either number.

Rule 57 computations. There is no shelf life as such. The valuation date is fixed by the triggering event, such as the date of transfer, so the computation must be as of that date. A computation prepared for a different date is simply the wrong one.

Ind AS and US GAAP fair value measurements. These are as of the reporting date, or the acquisition date for a business combination. They are remeasured every period, so an earlier report does not carry forward. Goodwill impairment testing, for example, is an annual exercise.

A Report Can Expire Before Its Deadline

Even inside a fixed window, a report stops being reliable when something material changes. Typical triggers:

• A new funding round or term sheet at a different price
• Loss of a major customer, or a significant contract win
• A regulatory change affecting the business
• A sharp move in the sector or the wider market
• A cap table change that alters preferences or dilution

Auditors and investors ask one question: does the number still reflect reality on the day it is relied upon?

How to Plan Around Validity

• Start the clock late. Commission the valuation close to the transaction, not at the first conversation.
• Count backwards from the deadline. For FEMA, work out the latest date the certificate can be dated and still be under 90 days on the allotment date.
• Build a buffer. Delays in approvals and funds are common.
• Agree a refresh plan. Ask your valuer in advance how a bring-down or update would work if the deal slips.

Treat the validity period as the shortest of three limits: the number of days the rule specifies, the age at which the report stops reflecting the business, and the date the transaction actually closes. Where a rule gives no number, assume a short window and document why the report is still current. Because validity periods and rule numbers have been changing, confirm the current position with a professional before the transaction date, not after.