Securities & Financial Assets Valuation Under IBC: Complete Guide for 2026
Securities and Financial Assets (SFA) is one of three asset classes recognised by IBBI for registered valuer certification. This guide covers when SFA valuation is required, the regulatory framework governing it, accepted methodologies, and practical insights for entrepreneurs, investors, and corporate professionals navigating Indian insolvency and corporate law.
Part of our Complete Indian Startup Valuation Guide — 19 methods compared with formulas, stages & costs.
What Are Securities & Financial Assets Under IBBI?
The Companies (Registered Valuers and Valuation) Rules, 2017 define three asset classes for registered valuers. Securities and Financial Assets encompass all financial instruments that derive value from an underlying entity, contract, or asset pool. This includes equity and preference shares, debentures and bonds, mutual fund units, derivatives and options, insurance policies, bank deposits, pension funds, and intangible financial rights such as royalty streams and licensing agreements.
An IBBI registered valuer for SFA is qualified to value these instruments across multiple legal contexts — from IBC proceedings to Companies Act compliance, FEMA regulations, and SEBI-governed transactions.
When Is SFA Valuation Mandatory?
| Scenario | Legal Provision | Purpose |
|---|---|---|
| CIRP — Resolution plan evaluation | Regulation 35, IBBI (CIRP) Regulations | Fair value & liquidation value for CoC |
| Preferential transactions review | Section 43, IBC 2016 | Determine if transaction was at undervalue |
| Undervalued transactions | Section 45, IBC 2016 | Assess whether assets transferred below fair value |
| Fraudulent trading | Section 66, IBC 2016 | Value assessment for clawback proceedings |
| Share valuation for allotment | Section 247, Companies Act 2013 | Fair value of shares for private placements |
| ESOP valuation | SEBI (Share Based Employee Benefits) Regulations | Exercise price and fair value for stock options |
| Foreign investment pricing | FEMA (Non-Debt Instruments) Rules, 2019 | Minimum pricing for FDI inbound transactions |
| Shares received below fair value | Section 56(2)(x), Income-tax Act read with Rule 11UA (Rule 57, Income-tax Rules, 2026); Section 56(2)(viib) angel tax abolished from AY 2025-26 | Fair market value of unquoted shares for the recipient |
SFA Valuation Methodologies
📈 Income Approach
Discounted Cash Flow (DCF): Projects future cash flows and discounts to present value. Most commonly used for operating businesses.
Dividend Discount Model: Values equity based on expected future dividend payments. Suitable for mature, dividend-paying companies.
Excess Earnings Method: Isolates earnings attributable to intangible assets above normal returns on tangible assets.
🏢 Market Approach
Comparable Company Analysis: Applies multiples from publicly traded peers — EV/EBITDA, P/E, EV/Revenue — adjusted for size, liquidity, and growth differentials.
Comparable Transaction Method: Uses acquisition multiples from recent M&A deals in similar industries and geographies.
Prior Transaction Method: References the entity's own prior funding rounds or share transfers as valuation anchors.
Cost Approach / Net Asset Value
Values the entity by summing individual asset values (adjusted to fair market value) and subtracting liabilities. Most appropriate for holding companies, investment vehicles, and asset-heavy entities. Under IBC, this approach is critical for determining liquidation value where going-concern assumptions are not applicable.
SFA Valuation in CIRP: Practical Workflow
When appointed by the Resolution Professional during CIRP, an SFA valuer typically follows this structured workflow:
- Appointment: The SFA valuer is appointed as part of a set of registered valuers — one per asset class, with a coordinating valuer designated by the RP in consultation with the committee — within 7 days of the RP's appointment and by the 47th day of the process (Regulation 27(1); one set only for an MSME corporate debtor since 20 May 2026).
- Scope determination: Identify all securities and financial assets on the corporate debtor's balance sheet — investments in subsidiaries, associates, JVs, marketable securities, receivables, and financial guarantees.
- Methodology meeting: Before any estimate is computed, the valuers explain their methodology to the members of the committee at a meeting the RP convenes (Regulation 35(1)(b)); the minutes are annexed to the report.
- Data gathering: Obtain audited financials, investment schedules, subsidiary financials, security agreements, and market data for comparable instruments.
- Individual asset valuation: Value each security/financial asset under the International Valuation Standards (mandatory since 1 April 2026) using the most appropriate methodology. Listed securities use market price with adjustments for block size and liquidity. Unlisted investments require full DCF or comparable analysis. Receivables are assessed on the seven parameters in IBBI Circular IBBI/RV/103/2026: nature, credit risk and related-party status, ageing, legal enforceability, recovery record, macro and industry factors, and any other relevant factor.
- Portfolio-level adjustments: Apply portfolio concentration risk, cross-holding adjustments, and holding company discounts where applicable.
- Fair value and liquidation value estimates: Present both values in the Board's report format (Regulation 35(1A); Circular IBBI/RV/103/2026) — 23 mandatory contents, the VRIN in every page footer, methodology documentation and reconciliation between approaches — and give the coordinating valuer the inputs it needs to compute the fair value of the corporate debtor with its synergies. The committee receives the average of the two closest estimates; a third set may be appointed where the two differ by 25% or more (Regulation 35(1)(e)–(g)).
Key Challenges Specific to SFA Valuation
Challenges SFA Valuers Face
- Valuing unlisted subsidiaries: Most corporate debtors hold investments in unlisted entities with limited financial transparency, requiring detailed bottom-up analysis.
- Contingent financial assets: Insurance claims, tax refunds, and litigation settlements require probability-weighted valuation approaches.
- Cross-border securities: Foreign currency denominated instruments need exchange rate considerations, repatriation restrictions, and jurisdictional legal analysis.
- Derivative positions: Open derivatives positions require mark-to-market valuation with counterparty credit risk adjustments.
- Inter-corporate deposits and guarantees: Financial guarantees and ICDs in distressed group structures often have severely impaired recovery values.
IBBI Registration Requirements for SFA Valuers
Eligibility & Registration Process
- Must be a member of a Registered Valuers Organisation (RVO)
- Educational qualifications: CA, CMA, CS, MBA (Finance), CFA, or equivalent
- Minimum 3 years relevant experience in valuation of financial assets
- Pass the IBBI Valuation Examination for SFA asset class
- Complete 50 hours of educational coursework from recognised RVO
- Maintain Continuing Professional Education: 20 hours annually
- Carry professional indemnity insurance
- Annual renewal with compliance certificate
Frequently Asked Questions
SFA under IBBI includes equity shares, preference shares, debentures, bonds, mutual fund units, derivatives, insurance policies, bank deposits, pension funds, and any financial instrument deriving value from an underlying asset or entity. The asset class is defined under the Companies (Registered Valuers and Valuation) Rules, 2017.
SFA valuation by IBBI registered valuer is mandatory for CIRP proceedings under IBC, preferential and undervalued transaction review under Sections 43–45 of IBC, share valuation under Section 247 of Companies Act 2013, ESOP valuations, mergers and acquisitions requiring fairness opinions, and FEMA compliance for foreign investment pricing.
SFA valuation fees depend on asset complexity, entity size, and purpose. CIRP valuations typically range from ₹1 lakh to ₹10 lakh. Standalone share valuations start from ₹25,000 for simple cases. Complex valuations involving multiple asset classes or cross-border elements command higher fees. Contact us for a customised quote.
SFA valuers value financial instruments — shares, debentures, derivatives, and intangible financial assets. Land & Building valuers handle real estate and immovable property. Plant & Machinery valuers cover industrial equipment. Each asset class requires separate IBBI registration with specific qualifications and examinations.
Explore all 19 valuation methods in our Complete Indian Startup Valuation Guide with key formulas and comparison table.
Need SFA Valuation by IBBI Registered Valuer?
Registration No: IBBI/RV/03/2019/12333 — Specialising in Securities & Financial Assets valuation for CIRP, Companies Act, FEMA, and tax compliance.