Shares issued to a non-resident cannot be priced below fair value. A Chartered Accountant or other eligible professional certifies the value using an internationally accepted pricing method, and the certificate supports the FC-GPR filing. Valuation is also needed for later issues, share transfers, conversions and ESOPs.
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Key facts
| Pricing rule | Shares issued or sold to a non-resident: not below fair value; shares bought from a non-resident by a resident: not above fair value |
|---|---|
| Who certifies | A Chartered Accountant or SEBI-registered merchant banker for FEMA purposes; a registered valuer where company law requires one |
| Methods | Internationally accepted methods such as discounted cash flow, net asset value and comparables |
| When needed | Share issue, capital increase, share transfer, loan conversion, ESOP |
| Linked filings | Form FC-GPR within 30 days of allotment for issues; Form FC-TRS within 60 days of transfer or receipt of consideration, whichever is earlier, for transfers between residents and non-residents |
| Freshness | The valuation certificate should not be more than 90 days old at the time of the transaction or filing |
Why valuation matters
FEMA prevents foreign investors from buying shares at a price below fair value, and from receiving more than fair value on certain exits. The valuation is evidence that the price complies, and it is checked in the RBI filing. The company may also need a registered valuer's report under company law for some private placements.
Common methods
- Net asset value: for early-stage or asset-heavy entities.
- Discounted cash flow: for businesses with forecastable cash flows.
- Market comparables: for companies where comparable data exists.
- Recent transaction price: can be a reference point, but does not replace a certificate.
When you need a fresh valuation
- Each time the company issues shares to a foreign investor.
- When shares are transferred between a resident and a non-resident.
- When an external commercial borrowing is converted into equity.
- When the Indian company grants ESOPs, or for the tax value of exercised ESOPs.
- For a merger, demerger or buyback.
What this means for an Australian parent
- For a newly formed wholly owned subsidiary, the valuation is usually straightforward, but it still has to be documented. The Australian parent should expect to sign a representation and keep the valuation with the investment records for the Australian group's audit.
Mistakes to avoid
- Issuing shares at face value without checking the pricing floor.
- Using an old valuation for a new issue.
- Treating the valuation as a formality and not keeping the workings.
- Using the wrong certifier for the particular transaction.
How AU Corporate handles this
Our valuation team prepares share capital and ESOP valuations that support your RBI filings.
Related services: Transaction advisory
Official sources
Rules on this page can be verified at the primary sources: Ministry of Corporate Affairs, Reserve Bank of India, Income Tax Department and the GST portal.
Frequently asked questions
Who can issue the valuation certificate?
An eligible professional as defined in the FEMA rules, such as a Chartered Accountant or a merchant banker, depending on the transaction.
Is a valuation needed for a wholly owned subsidiary at incorporation?
A valuation is needed for a wholly owned subsidiary at incorporation for shares issued to the foreign parent, because the pricing must comply with the valuation rules and the filing is supported by a certificate.
Can shares be issued at a premium?
Shares can be issued at a premium in India. The price cannot be below fair value, but it can be higher.
How long is a valuation valid?
There is no single validity that fits every case, so obtain one close to the transaction date.
What is Form FC-GPR and when is it due?
Form FC-GPR is the report an Indian company files with the RBI after issuing shares to a foreign investor. It must be filed within 30 days of the share allotment through the RBI's FIRMS portal, with supporting valuation and Company Secretary certificates. Late filing attracts a Late Submission Fee or compounding.
What is a valuation certificate and when is it required?
Shares issued to a non-resident cannot be priced below fair value. A Chartered Accountant or other eligible professional certifies the value using an internationally accepted method. It supports the FC-GPR filing and later share issues and transfers.
What is Form FC-GPR?
The report an Indian company files with the RBI after issuing shares to a foreign investor, within 30 days of the allotment, through the FIRMS portal.
What is the FIRMS portal?
The FIRMS portal is the RBI's Foreign Investment Reporting and Management System, where Indian companies file foreign investment reports such as FC-GPR through the Single Master Form. The company needs portal access and supporting certificates from a Company Secretary or Chartered Accountant.
How old can a valuation certificate be for FEMA filings?
A valuation certificate for FEMA filings should not be more than 90 days old at the time of the transaction or filing. It is issued by a Chartered Accountant or a SEBI-registered merchant banker.
Related guides
Funding the Indian Subsidiary: FEMA Rules, Share Allotment and Form FC-GPR
How an Australian parent invests in an Indian subsidiary: equity, CCPS, ECB, the 60-day allotment rule, pricing, and RBI reporting through Form FC-GPR on FIRMS.
Read the guide →ESOPs for Indian Employees of an Australian Parent: FEMA, Tax and Cost Recharge
How ESOPs and RSUs work for employees of an Indian subsidiary: FEMA reporting, employee tax, valuation, cost recharge and transfer pricing for an Australian parent.
Read the guide →Restructuring, Mergers and Exit: Your Options for an Indian Subsidiary
Options to restructure, sell, merge or close an Indian subsidiary: share sale, slump sale, merger, buyback, strike-off and liquidation, with tax and RBI steps.
Read the guide →Repatriating Profits to Australia: Dividends, Fees, Royalties, Loans and the Paperwork
How an Australian parent receives money from its Indian subsidiary: dividends, service fees, royalties, loans. Forms 145 and 146, Withholding Tax and DTAA relief.
Read the guide →Sources
Last updated 15 October 2026. General information only, not legal or tax advice. Indian and Australian rules change often; confirm current requirements before acting.