Valuation of unquoted shares: profit earning capacity or break up value governs market value, with specified capitalisation rules. Unquoted equity shares of investment, holding and managing agency companies are valued by reference to either the profit earning capacity (capitalisation of adjusted maintainable profits) or the break up value where profits are uncertain or liquidation is imminent. Maintainable profits are averaged over five adjusted years after excluding non-recurring items, adding back debited allowances, adjusting revenue items, deducting tax and excluding preference dividends. Managing agency valuation separates present worth of commission for unexpired term and capitalised non commission income. Holding companies attract a 10% premium and wholly owned subsidiaries must be consolidated for valuation.
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Provisions expressly mentioned in the judgment/order text.
Valuation of unquoted shares: profit earning capacity or break up value governs market value, with specified capitalisation rules.
Unquoted equity shares of investment, holding and managing agency companies are valued by reference to either the profit earning capacity (capitalisation of adjusted maintainable profits) or the break up value where profits are uncertain or liquidation is imminent. Maintainable profits are averaged over five adjusted years after excluding non-recurring items, adding back debited allowances, adjusting revenue items, deducting tax and excluding preference dividends. Managing agency valuation separates present worth of commission for unexpired term and capitalised non commission income. Holding companies attract a 10% premium and wholly owned subsidiaries must be consolidated for valuation.
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