Issue: № 4, 2026
Doi: https://doi.org/10.37634/efp.2026.4.5
The issue of determining the fair value of shares has become particularly significant in Ukraine since 2017, following the large-scale implementation of mandatory buyout procedures of minority shareholders’ shares by majority shareholders (squeeze-out). In practice, these procedures have generated numerous disputes due to the substantial undervaluation of buyout prices. Such problems are largely caused by imperfections in national legislation and by the possibility of manipulating valuation methodologies in favor of controlling shareholders. According to Ukrainian national valuation standards, three main methodological approaches are used in property valuation: the asset-based approach, the income approach, and the market (comparative) approach. However, in practical valuation reports prepared for squeeze-out procedures, the asset-based approach is often disregarded, typically justified by the alleged lack of necessary accounting information or by claims regarding the priority of the income approach. This practice creates opportunities for significant underestimation of the fair value of shares. An analysis of judicial practice, including decisions of the Supreme Court of Ukraine, demonstrates that the asset-based approach should be applied alongside other valuation methods. Within this framework, the fair value of a share may be determined based on the company’s net asset value divided by the total number of outstanding shares. Empirical comparisons between actual squeeze-out prices and the net asset value per share reveal considerable discrepancies, confirming systematic undervaluation in a number of cases. Furthermore, large joint-stock companies in Ukraine prepare financial statements in accordance with International Financial Reporting Standards (IFRS), which require periodic revaluation of assets at fair value. Consequently, the necessary data for applying the asset-based approach are generally available in financial reporting. It is also important to emphasize that international valuation standards cannot substitute national valuation regulations, which remain legally binding for valuation activities in Ukraine. In judicial disputes related to squeeze-out procedures, courts rely primarily on forensic economic examinations rather than valuation reports commissioned by majority shareholders. Such examinations must be conducted in accordance with national valuation standards and relevant methodological guidelines for determining the value of shares. Therefore, the application of the asset-based approach in the valuation of shares during mandatory buyout procedures is essential for ensuring a fair price and protecting the rights of minority shareholders. The final valuation should be determined in accordance with the principle of the highest and best use of the enterprise as an integrated property complex.
Keywords : property valuation methods, asset-based approach, income approach, comparative approach, valuation standards, balance sheet, shares, net assets
References:
1. Kolohoida O.V., Malenko O.M. Legal aspects of assessing the market value of shares in squeeze-out and sell-out procedures. Pravo Ukrainy. 2019. № 8. pp. 156-180. (in Ukrainian).
2. Korol V. How to stop the robbery of minority shareholders: The forced buyout of the remains of «public wealth» from ordinary citizens for «pennies» continues. Ekonomichna Pravda. 2018, April 16. URL: https://www.epravda.com.ua/columns/2018/04/16/636025/ (in Ukrainian).
3. Pohribna S.O. (2025, January 28). A poorly drafted law led to the confiscation of property from Ukrainians and not in the public interest. Antykoruptsiine Prydniprovia. URL: https://larp.media/2025/01/28/neyakisnyj-zakon-pryzviv-do-konfiskacziyi-vlasnosti-v-ukrayincziv-i-ne-v-suspilnyh-interesah/ (in Ukrainian).
4. Belkin L.M. (2022). Problems of expert research in determining the value of shares in expert institutions of the Ministry of Justice of Ukraine (based on examples from judicial practice). Legal Scientific Electronic Journal. 2022. № 8. pp. 230-239. (in Ukrainian).
5. Maksymov S. Valuation of corporate rights: Priority of methodological approaches. AFO. 2026, February 3. URL: https://afo.com.ua/uk/news/2-general-assessment/1595-corporate-rights-assessment-priority-of-methodological-approaches (in Ukrainian).
6. Problematic issues of squeeze-out in Ukraine and ways to solve them. Ukrinform Press Center. 2026, February 6. URL: https://www.youtube.com/live/sHOEcU8WaSA (in Ukrainian).
7. Unified State Register of Court Decisions. URL: https://reyestr.court.gov.ua/Review/ (in Ukrainian).
8. Dubytskyi D.P., Stupniker H.L. Business valuation according to national and international standards. Efficient Economy. (4). URL: http://www.economy.nayka.com.ua/?op=1&z=2961 (in Ukrainian).