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Merchant Bankers to Compute the FMV for Startups

The government has amended its last notification on startups to redefine the definition of startup, and the process of recognition, requiring the companies to register with the Department of Industrial Policy and Promotion (DIPP) and take permission from an inter-ministerial board before issuing shares and getting investors on board.

The DIPP, the nodal body for Startup India, through a gazette notification has said that an entity shall now be considered a startup up to seven years from the date of its incorporation/registration, or till its annual turnover exceeds Rs 25 Cr. The government has also clarified that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.

According to a new gazette notification, the amended definition of a startup is as follows:

An entity shall be considered as a Startup:

Upto a period of seven years from the date of incorporation/registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India. In the case of Startups in …

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