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Swap of Shares

A swap ratio is the rate at which an acquiring company exchanges its shares for the shares of the target company during a merger or acquisition.

The swap ratio determines how many shares the acquiring company offers in exchange for each share of the target company. This mechanism ensures shareholders of the target company receive proportional ownership in the merged or acquiring entity.

Swap of Shares transaction when Unlisted Companies are involved

Compliance with:

Section 62(1)(c) of Companies Act 2013 and Section 56(2)(x) of Income Tax Act,1961.

Valuation Report Requirement:

A valuation report from a Registered Valuer accredited under the Companies (Registered Valuers and Valuation) Rules, 2017, is mandatory, to comply with Companies Act 2013.
A valuation report from a Merchant Banker is mandatory, to comply with Income Tax Act 1961.

Swap of Shares transaction when listed Companies are involved

Compliance with:

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.

Valuation Report Requirement:

A valuation report from a Registered Valuer accredited under the Companies (Registered Valuers and Valuation) Rules, 2017, is mandatory, to comply with Companies Act 2013.

Key Points to Consider

01

Which is the Governing Law for Unlisted Companies?

Companies Act 2013 and Income Tax Act 1961

02

Which is the Governing Law for Listed Companies?

Securities and Exchange Board Of India (Issue Of Capital and Disclosure Requirements) Regulations, 2018

03

Who Does it?

Registered Valuer and Merchant Banker

04

When it is required?

At the time of Swap

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