For capital gains tax generally, 'market value' means the price which an asset might reasonably be expected to fetch on a sale in the open market1. In determining the market value of unquoted shares (those not quoted on a recognised stock exchange2) it must be assumed that there is available to any prospective purchaser all the information which a prudent prospective purchaser might reasonably require if he were proposing to purchase it at arm's length by private treaty from a willing vendor3.
Information available to prospective purchaser
The information deemed to be available in each case will depend on the circumstances. For example, if a 20% shareholding is being valued it is probable that the information that could reasonably be required is far less than that for the acquisition of a 60% controlling interest. If, however, the price to be paid for the 20% interest is substantial, additional information would reasonably be required compared with an investment of a much more modest amount.
In Clark4, it was held that a prudent purchaser of a 3% holding, involving an outlay of between £100,000 and £169,000, could reasonably expect to receive up-to-date information about the company's profits but not about a possible sale of the company.
In Caton5, it was held that a prospective purchaser of a 14% shareholding for £1m could reasonably require unpublished information covering approaches for sale and future prospects and information from management accounts and budget forecasts.
It is not to be envisaged that the prospective purchaser