Registered Valuer in Companies Act 2013

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The Companies Act 2013 has introduced the concept of ‘Registered Valuer’ through Section 247 Chapter XVII to cover valuation of any property, stock, shares, debentures, securities, goodwill or any other assets of the company as well as its net worth and liabilities.
Valuation team of Corporate Professionals here presents the summarized presentation on Registered Valuer.

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Registered Valuer in Companies Act 2013

  1. 1. Registered Valuer Companies Act, 2013 30/10/2013
  2. 2. Registered Valuers Registered Valuers Stock, Shares, Debentures, Securities, Goodwill Financial Valuer Technical Valuer Property Persons eligible to apply for being Registered as Valuer • A Chartered Company Accountant, Secretary • Member of the Institute of Engineers or Member or Cost of the Institute of Accountant in whole time practice or retired member Shall have 5 Years of Continuous Experience, Post Qualification Architects in whole time Shall have 5 Years of Continues Experience, Pos t Qualification practice. of Indian Corporate law Service or any other person • as prescribed. A Merchant Banker registered with SEBI and • A person or firm or LLP or which has in employment Merchant under possessing it carrying CA/CS/CWA for out (signing) Valuation by such qualified persons. Banker both qualifications may act in dual capacity. Registered Valuer to be appointed by Audit Committee or in its absence by the Board of Directors.
  3. 3. Registered Valuers Registered Valuers (Financial Valuation) Value Responsibilities • Valuer to make impartial, true and fair valuation • Not undertake valuation if directly or indirectly interested • Exercise due diligence • Valuation to be done as per rules Upon contravention • Fine – 25,000 to 100,000 With intention to defraud • Imprisonment upto 1 year and • Fine- 1,00,000 to 5,00,000 Additionally upon contravention, to refund remuneration received and also liable for damages. Further Issue of Shares Corporate Debt Restructuring Compromise and Arrangements Registered Valuer Exit to Minority Shareholders Winding up / Liquidation Non Cash Transactions with Directors
  4. 4. Section wise Requirement of Registered Valuers Section 62(1)(c) – For Valuing further Issue of Shares Section 192(2) – For Valuing Assets involved in Arrangement of Non Cash transactions involving Directors Section 230(2)(c)(v) – For Valuing Shares, Property and Assets of the company under a Scheme of Corporate Debt Restructuring Section 230(3) and 232(2)(d) – For Valuation including Share swap ratio under a Scheme of Compromise/Arrangement, a copy of Valuation Report by Expert, if any shall be accompanied Section 232(3)(h) - Where under a Scheme of Compromise/Arrangement the transferor company is a listed company and the transferee company is an unlisted company, for exit opportunity to the shareholders of transferor company, valuation may be required to be made by the Tribunal Section 236(2) – For Valuing Equity Shares held by Minority Shareholders Section 260(2)(c) – For preparing Valuation report in respect of Shares and Assets to arrive at the Reserve Price or Lease rent or Share Exchange Ratio for Company Administrator Section 281(1)(a) – For Valuing Assets for submission of report by Company Liquidator Section 305(2)(d) – For report on the Assets of the company for preparation of declaration of solvency under voluntary winding up Section 319(3)(b) – For Valuing the interest of any dissenting member of the transferor company who did not vote in favour of the special resolution, as may be required by the Company Liquidator Section 325(1)(b) – For valuation of annuities and future and contingent liabilities in winding up of insolvent company
  5. 5. Registered Valuers (Draft Rules) – Methods of Valuation I. Before adopting methods, decide Valuation Approach• Asset Approach • Income Approach • Market Approach II. Valuer to consider following points while undertaking Valuation• Nature of the Business and the History of the Enterprise from its inception • Economic outlook in general and outlook of the specific industry in particular • Book Value of the stock and the Financial condition of the business • Earning Capacity of the company • Dividend-Paying Capacity of the company. • Goodwill or other Intangible value • Sales of the stock and the Size of the block of stock to be valued • Market prices of stock of corporations engaged in the same or a similar line of business • Contingent Liabilities or substantial legal issues, within India and Abroad, impacting business • Nature of Instrument proposed to be issued, and nature of transaction contemplated by parties
  6. 6. Registered Valuers (Draft Rules) – Methods of Valuation III. Registered Valuer shall make valuation of any asset in accordance with any one or more of the following methodsa. Net Asset Value Method (NAV) b. Market Price Method c. Yield Method / PECV Method d. Discounted Cash Flow Method (DCF) e. Comparable Companies Multiples Method (CCM) f. Comparable Transaction Multiples Method (CTM) g. Price of Recent Investment Method (PORI) h. Sum of the parts Valuation Method (SOTP) i. Liquidation Value j. Weighted Average Method k. Any other method accepted or notified by RBI, SEBI or Income Tax Authorities l. Any other method that valuer may deem fit provided adequate justification for use of suh method (and not any of the above methods) is provided IV. Registered Valuer shall make valuation of any asset as on the Valuation date and in accordance with applicable standards, if any stipulated for this purpose. V. Contents of Valuation report shall contain information as contained in Form 17.3
  7. 7. Registered Valuers (Forms) – Contents of Valuation report 1) Description of valuation engagement (a) Name of the client: (b) Other intended users: (c) Purpose for valuation: (2) Description of business/ asset / liability being valued (a) Nature of business or asset / liability (b) Legal background (c) Financial aspects (d) Tax matters (3) Description of the information underlying the valuation (a) Analysis of past results (b) Budgets, with underlying assumptions (c) Availability and quality of underlying data (d) Review of budgets for plausibility (e) Statement of responsibility for information received
  8. 8. Registered Valuers (Forms) – Contents of Valuation report (4) Description of specific valuation of assets used in the business: (a)Basis or bases of value (b) Valuation Date (c) Description of the procedures carried out (d) Principles used in the valuation (e) The valuation method used and reasoning (f) Nature, scope and quality of underlying data and (g) The extent of estimates and assumptions together with considerations underlying them (5) Confirmation that the valuation has been undertaken in accordance with these Rules (6) Further it is certified that valuation has been undertaken after taking into account relevant conditions/regulations/rules/notifications, if any, issued by the Central/State Government(s) from time to time. (i) The valuation report must clearly state the significant assumptions upon which the value is based. When reporting there may be instances, where there are confidential figures, these must be summarized in a separate exhibit (ii) In his valuation report, the registered valuer must set out a clear value or range of values along with the reasoning (ii) In case the valuer has been involved in valuing any part of the subject matter of valuation in the past, the past valuation report(s) should be attached and referred to herein. In case a different basis has been adopted for valuation (than adopted in the past), the valuer should justify the reason for such differences
  9. 9. Offering varied legal & financial services, 'Corporate Professionals' has emerged as an innovative leader in delivering corporate advisory & solutions. Aiming to become a one-stop-shop offering integrated legal and financial solutions, the Group has successfully completed a high number of corporate transactions in the last couple of years. We have successfully engaged in and executed over 3000 assignments of more than 1200 corporate houses, domestic as well as international, across several Industries. The Group has distinctively positioned itself as Merchant Banker (SEBI Cat-I license) with Boutique Investment Banking & Transaction Advisory services and as Legal Advisors with high quality comprehensive Corporate Laws, Tax & Regulatory services. With an endeavor to satisfy our clients' stated as well as unstated needs, we adopt the most feasible and legally viable approach to execute assignments in a seamless, cost effective and time bound manner. High Integrity and Confidentiality in dealing with clients and assignments undertaken is deeply inculcated in our team. The Group prestigiously owns a strong skill set that comes from its research oriented, multidisciplinary, young and dynamic team. With right blend of legal and financial skills, continuous focus on research and effective use of Information Technology, Corporate Professionals is creating customized products, for different class of clients. Innovative flair of executing assignments with problem solving zeal and use of Technology has enabled us to offer path breaking solutions. Not just for executing Clients' Assignments but also in internal management, the Group adheres to a system driven approach. The Group dedicates around 30% working time of its professional team on continuous research in the dynamic legal and financial fields, with an object of creating a knowledge hub, extensive knowledge dissemination and to develop skills of its team to deliver high quality services. “Corporate Professionals” refers to one or more of group companies and its network of firms and other entities, each of which is a separate legal, independent entity. For more details, please visit www.corporateprofessionals.com. About Corporate Professionals
  10. 10. Our Valuation Team Mr. Chander Sawhney Vice President M: +91 9810557353 D: +91 11 40622252 E: chander@indiacp.com Mr. Maneesh Srivastava Senior Manager M: +91 9871026040 D: +91 11 40622255 E: maneesh@indiacp.com Mr. Gaurav Kumar Barick Assistant Manager M: +91 8130141874 D: +91 11 40622241 E: gaurav@indiacp.com Mr. Sameer Verma Assistant Manager M: +91 9911945607 D: +91 11 40622216 E: sameer@indiacp.com
  11. 11. As Close As You Need As Far As You Go…… Mumbai Office Delhi Office Indian Offices D-28, South Ex., Part-I, New Delhi-110049, D-38, South Ex., Part-I, New Delhi-110049, T: +91 11 40622255 M:+ 91 9871026040, E: info@indiacp.com 520, Mastermind- I, Royal Palms Estate, Aarey Colony, Goregaon East, Mumbai -400065 T: +91 2267109044 M:+ 91 9820079664 E: mahipal@indiacp.com Bedford Office (United Kingdom) 2-4 Mill Street, MK40 3HD, Bedford Switchboard: +44 (0) 2030063240, E: ukoffice@indiacp.com Overseas Offices India Ahmedabad, Allahabad, Bangalore, Bhopal, Bhubaneshwar, Chandigarh, Chennai, Coimbatore, Goa, Guwahati, Gwalior, Hydera bad, Indore, Jaipur, Jammu, Kanpur, Kochi, Kolkata, Lucknow, Ludhiana, Patna, Pune. Our Associates Overseas Bulgaria, Belgium, British Virgin Islands, Canada, China, Costa Rica, Cyprus, European Union, Germany, Hongkong, Ireland, Japan, Kenya, Malaysia, Mauritius, Singapore, Sri Lanka, Switzerland, The Netherlands, Turkey, United Arab Emirates, United Kingdom, United States.

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