Comparison
Advisory vs Statutory Valuation — What You Can and Cannot File
An advisory valuation is an analysis prepared to support negotiation or planning. A statutory valuation is a report the law requires a prescribed professional to sign for a specific filing. An advisory valuation, however rigorous, cannot be filed. Founders routinely discover this only when a filing is rejected.
Both produce a number, and a good advisory valuation may be more analytically thorough than the statutory one. That is not the distinction. The distinction is who signed it and under what authority.
Side by side
| Advisory valuation | Statutory valuation | |
|---|---|---|
| Purpose | Negotiation, board reporting, internal planning, investor conversations | Satisfying a specific statutory filing or tax position |
| Who prepares it | Anyone with the relevant financial expertise — an advisor, a CFO, a consultantWhich professional depends on which law compels the valuation, not on the asset. | Only the professional the relevant law prescribes |
| Can it be filed? | No. Not with the ROC, not in support of a tax position | Yes — that is its only purpose |
| Typical content | DCF, comparable transactions, scenario analysis, sensitivity tables, a negotiation brief | A prescribed methodology, the valuer's registration details, and a signed conclusion |
| When you need it | Before and during a fundraise, for planning, and to hold your own in a pricing discussion | When the transaction is actually executed — at allotment, at exercise, at transfer |
| Cost | Generally lower — it is analysis, not a regulated attestation | Generally higher, and it recurs where the law imposes a validity window |
Which one do you need?
Find your situation. The requirement follows from the law compelling the valuation, not from the asset or the company.
You are preparing to raise and want a defensible number for negotiation
→ Advisory valuation is sufficient
No statutory requirement
You have agreed terms and are about to allot shares
→ Statutory valuation — IBBI Registered Valuer
Companies Act 2013, s.62(1)(c) with Rule 13(1)
An investor or your CA asked for a 'valuation report' by name
→ Almost certainly statutory. Ask which filing it is for before commissioning anything
Depends on the filing
You need a number for your board pack or internal option pricing discussion
→ Advisory valuation
No statutory requirement
Employees are exercising options
→ Statutory valuation — SEBI Category I Merchant Banker, within 180 days of exercise
Rule 3, Income-tax Rules
Questions
My advisory valuation used a proper DCF. Why can't I file it?
Because the requirement is about who signs, not about methodology quality. A statutory valuation is an attestation by a professional the law prescribes, carrying their registration number and their liability. Rigour does not substitute for registration.
Can the advisory valuation be converted into a statutory one?
Not directly, but the underlying financial model is usually reusable. A statutory valuer will form their own view and sign their own report, and the model and assumptions you already have shorten that engagement rather than replacing it.
Do I need both?
Often, and at different times. The advisory valuation is useful months before a round, while you are negotiating. The statutory report is needed at execution. Getting the advisory work done first usually makes the statutory engagement faster.
Related
Reviewed by
Written by the Lekha Advisory editorial team and checked by independent professionals against their own areas of registration.
Bhawna Piplani
Advocate-on-Record (Supreme Court of India), Company Secretary, IBBI Registered Valuer (Securities or Financial Assets)
Advocate-on-Record before the Supreme Court of India, Company Secretary, and IBBI Registered Valuer in the Securities or Financial Assets asset class, registered in December 2022. Founder of Piplani & Associates, practising in corporate and legal advisory, intellectual property, mergers and acquisitions, and valuation. NCLT practitioner and Registered Trademark Attorney.
Registered with: Supreme Court of India · ICSI · IBBI
Kaushal Arora
Chartered Accountant, MBA (Finance & Strategy)
Chartered Accountant with over 20 years across venture capital, financial advisory and fund operations. Currently CFO of a SEBI-registered Category I AIF, covering fund structuring, valuations, investor reporting, and SEBI, RBI, FEMA and taxation compliance. Has advised over 100 startups on capital raising, financial modelling and valuation using DCF, comparable transactions and scenario analysis.
Registered with: ICAI
Reviewers check factual accuracy against their own areas of registration. Lekha is not a firm of Chartered Accountants; statutory work is performed by independent registered professionals under their own engagement letters.
Primary sources
This page states the position under the following instruments. Where a figure differs from other published guidance, the instrument governs.
- Companies Act 2013 s.62(1)(c) with Rule 13(1); Rule 16(1)(c); Rule 8, Companies (Share Capital and Debentures) Rules 2014
Effective . Requires a valuation report from an IBBI Registered Valuer for preferential allotment, ESOP trust funding, and sweat equity. - SEBI (Merchant Bankers) (Amendment) Regulations 2025, notification SEBI/LAD-NRO/GN/2025/282 dated 3 December 2025
Effective . Restricted fresh valuation engagements to merchant bankers holding registration for valuation-related activities from 2 January 2026, with in-flight assignments completable within nine months (approximately 2 October 2026).
Accuracy and review history
Last verified on against 4 primary instruments.
Verified against: DPIIT Notification G.S.R. 108(E) dated 4 February 2026; Finance Act 2024 — omission of Section 56(2)(viib); SEBI (Merchant Bankers) (Amendment) Regulations 2025, notification SEBI/LAD-NRO/GN/2025/282 dated 3 December 2025; Income-tax Act 2025
- DPIIT turnover ceiling corrected from ₹100 crore to ₹200 crore (₹300 crore for Deep Tech) per G.S.R. 108(E).
- Deep Tech category added — 20-year recognition window.
- Cooperative Societies added to eligible entity types.
- Angel Tax content rewritten: Section 56(2)(viib) abolished with effect from 1 April 2025, so it is no longer a reason to obtain a merchant banker valuation or DPIIT recognition.
- Registered Valuer requirement under Section 62(1)(c) added where previously only a merchant banker was described.
- Merchant banker eligibility updated for the SEBI 2025 valuation-activity restriction.
- Income-tax Act 2025 renumbering noted alongside 1961 Act citations.
- DPIIT processing times corrected to 7–14 days (straightforward) and 2–8 weeks (complex), from operational experience.