A basic rule in valuing shares in a company is to reject evidence of events which occurred after the valuation date. Danckwerts J said of his task: ‘The result is that I must enter into a dim world peopled by the indeterminate spirits of fictitious or unborn sales. It is necessary to assume the prophetic vision of a prospective purchaser at the moment of the death of the deceased, and firmly to reject the wisdom which might be provided by the knowledge of subsequent events . . By the terms of the section I have to imagine the price which the property would fetch if sold in the open market. This does not mean that a sale by auction (which would be improbable in the case of shares in a company) is to be assumed, but simply that a market is to be assumed from which no buyer is excluded . . At the same time, the court must assume a prudent buyer who would make full enquiries and have access to accounts and other information which would be likely to be available to him . .’
Judges:
Danckwerts J
Citations:
[1953] 2 All ER 1499
Jurisdiction:
England and Wales
Company
Updated: 01 May 2022; Ref: scu.241673
