Valuing shareholdings

"Fair value"

Again, the question of "fair value" is discussed in the "Selling Your Shareholding" Section.

In most situations where there is a need to value a company or shareholding, the valuer will be asked to arrive at a "fair value".

This may be because the company's Articles of Association direct that a "fair value" should be determined or because a court has directed that a "fair value" should be determined.

There is no judicial definition of what constitutes "fair value".

The starting point in determining what factors should be taken into account in determining a "fair value" is the company's Articles of Association.

Often, the Articles will themselves set out what is meant by the term "fair value".

Equally often however, the Articles will be silent on the question.

In the context of a shareholder dispute, potential argument over precisely what is meant by "fair value" can often be foreseen and the court has a wide power to direct what factors should be taken into account in determining any "fair value".

In the absence of any other guidance, precisely what constitutes a "fair value" is likely to come down to whatever the appointed valuer considers is appropriate.