A Squeeze-Out Valuer Sets the Price. Unless the Company Is Listed.

Section 236 of the Companies Act, 2013 engages once an acquirer, or a person acting in concert, becomes "registered holder of ninety per cent. or more of the issued equity share capital." The buyout is then made "at a price determined on the basis of valuation by a registered valuer in accordance with such rules as may be prescribed." Unlike Section 232's expert report, which is famously qualified by "if any" and covered in Merger Valuations: Conditional Under Company Law, Mandatory Under SEBI, nothing here is optional. Rule 27 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 supplies the prescribed manner, and opens by putting the job squarely on one person: "the registered valuer shall determine the price (hereinafter called as offer price) to be paid by the acquirer."

For an unlisted or private company, Rule 27(2) has the valuer do exactly what the opening words say. The offer price takes into account the highest price paid by any person or group for acquisition of shares during the last twelve months, and the fair price of the shares determined after considering valuation parameters including return on net worth, book value of shares, earnings per share, and the price earning multiple against the industry average. A valuation report with justification goes to the board. Four named parameters, one professional, and a number that did not exist until the valuer produced it.

Rule 27(1)(i) removes the pricing decision entirely: for a listed company "the offer price shall be determined in the manner as may be specified by the Securities and Exchange Board of India." Rule 27(1)(ii) then keeps the valuer in the transaction anyway, requiring that the registered valuer also provide a valuation report to the board of directors justifying the price.

The word doing the work is "also." The valuer is not being asked for a second opinion on a contested number, and is not checking SEBI's formula. He is producing a justification for an output that a regulation, not he, determined. It is the same professional, under the same section, on the same transaction, performing a structurally different function purely because the target's shares happen to be listed. This is the same instinct examined in A Listed Share Escapes the Registered Valuer Only When It Actually Trades, where a traded market price displaces professional judgement. Section 236 is the case where the displacement is only partial: the opinion goes, the report stays.

Ninety per cent is not the only door. Rule 26 of the same Rules governs the older scheme-based route to acquiring dissenting shareholders' shares, and requires nothing more than notice to those shareholders in Form CAA.14. It names no valuer, no price mechanism, and no parameters at all.

A third route arrived in 2020, when Rule 3 was amended to let a member holding not less than three-fourths of the shares apply for an arrangement for the purpose of a takeover offer. That application must carry "the report of a registered valuer disclosing the details of the valuation of the shares proposed to be acquired," and the parameters prescribed are near-identical to Rule 27(2)'s: highest price paid in the preceding twelve months, then return on net worth, book value, earnings per share and the industry price-earning multiple. So the framework now has one squeeze-out route at three-fourths requiring a valuer, one at ninety per cent requiring a valuer, and one requiring none.

The requirement has been enforced rather than assumed. In S. Gopakumar Nair v. OBO Bettermann India Pvt. Ltd., Company Appeal (AT) No. 272 of 2018, decided 9 July 2019, the NCLAT read the provision strictly: "Sub-section (2) of Section 236 clearly provides that the offer... has to be at a price determined on the basis of valuation, 'by a registered valuer' 'in accordance with such rules' as may be prescribed." The point mattered because the valuation in issue had not come from one, and the tribunal held that Section 236 had been improperly invoked.

A squeeze-out is the transaction where valuation matters most and consent matters least. The minority is not negotiating and cannot decline; the price is simply determined and imposed. That is precisely the fact pattern the registered-valuer mandate exists for, and it explains why Section 236 carries no "if any" and why the tribunal has refused to accept a valuation from anyone else.

Which makes the listed carve-out the interesting half. Where a market price exists, the framework trusts SEBI's formula over the valuer's judgement, but declines to dispense with the valuer, keeping him on to explain a number he did not choose. Read alongside the delisting regime, where a registered valuer's adjusted book value sits in the floor-price comparison for every voluntary delisting, the pattern is that the valuer's presence and the valuer's discretion are two separate things, and the framework will happily retain one while removing the other.