Marketability discount

A marketability discount, often called a discount for lack of marketability, reduces the value placed on shares to reflect that there is no ready market in which to sell them. It is argued most often in valuing a minority stake in an unlisted company under the Companies Act, 2013, whether on a reduction of capital or on a purchase ordered by the tribunal.

In Pannalal Bhansali v. Bharti Telecom Limited, decided on 10 March 2026, the Supreme Court upheld a selective reduction of capital at a price the tribunal had raised, held that a marketability discount remains a legitimate input where there is no finding of oppression, and said concurrent findings of the tribunals deserve deference unless perverse. Whether a discount belongs in a purchase order under section 242(2)(b) made after a finding of oppression is unsettled as at 21 September 2026. Our view is that it should not carry over in full, because the discount would reward the conduct that made the stake unsaleable.