Introduction ā Valuing Convertible Securities with Precision
Convertible instruments like CCPS (Compulsorily Convertible Preference Shares) and OCPS (Optionally Convertible Preference Shares) have become the preferred investment structure for Indian startups and private companies. They blend debt-like protection for investors with equity-like upside potential.
Valuing these instruments requires much more than applying a simple earnings multiple. It demands an understanding of rights, preferences, conversion terms, liquidation waterfalls, and exit scenarios.
CCPS and OCPS Valuation Services provide accurate, regulation-compliant, and investor-accepted assessments for pricing, reporting, and compliance under frameworks such as the Companies Act 2013, Income-tax Rules (Rule 11UA/11UB), FEMA 2017, and IBBI Valuation Standards.
Why CCPS and OCPS Valuation Is Critical
Convertible preference shares are at the heart of venture and private-equity transactions. Incorrect or non-compliant valuation can have serious financial and regulatory consequences, including:
- Tax disputes under Section 56(2)(viib) for share premium mismatches.
- Investor dissatisfaction due to improper conversion ratios.
- Auditor or ROC objections in valuation certificates.
- FEMA non-compliance in cross-border investment cases.
- Distortion of ESOP and dilution models during future funding rounds.
Accurate valuation ensures fairness, transparency, and defensibility during fundraising, buy-back, conversion, or exit.
