What is required for non-cash consideration for shares?

For non-cash consideration for shares, it is essential that it must be valued appropriately and that this valuation is received within a specific timeframe, typically within 5 years. This is to ensure that the considerations provided in exchange for shares have a legitimate market value and are reflective of the company’s worth. This requirement acts as a safeguard against potential abuses where shares might be issued for non-cash assets that do not hold a true value, thereby protecting the interests of both the company and its shareholders.

The timeline of 5 years allows for a reasonable period in which the valuation can be effectively determined and documented, ensuring transparency in transactions involving shares that are not directly linked to cash. Recognizing the importance of accurate and timely assessments of non-cash assets maintains the integrity of the share issuance process.

In contrast, other provided options do not accurately capture the primary principles governing non-cash consideration. For example, the idea that it must be equivalent to at least the nominal value does not encompass the full legal context needed for valid non-cash consideration. Approval by the stock exchange is not a requirement for all entities issuing shares, particularly private companies. Lastly, allowing valuation at shareholders' discretion undermines the objective assessment necessary in these transactions, potentially leading to inequitable