The Ministry of Corporate Affairs has issued and placed on its website, the draft Companies (Registered Valuers and Valuation) Rules, 2017 on 26th May, 2017 which shall come into force on 15th July, 2017. The said draft Rules is kindly available at the following link:
http://www.mca.gov.in/
These Rules have been made by the Central Government in exercise of the powers conferred by section 247 read with sections 458 and 469 of the Companies Act, 2013. The said rules contain various aspects pertaining to Registered Valuers and Valuation including:
· Who can become Valuers and the Process involved
· Mentions about Valuation Professional Organisations
· The Standards required to be adhered to while performing and reporting, and
· Regulation of the profession etc.
The comments/suggestions on the said Rules along with their justification are invited by the MCA from all the stakeholders by 27thJune, 2017 through its notice placed at the following link:
http://www.mca.gov.in/
Once the Registered Valuers rules are notified by the Ministry, any Person who will possess the prescribed qualifications and pass the valuation examination conducted by the Designated Agency, shall be allowed to act as the Registered Valuers.
Present Position under the Companies Act 2013
The notification dated 18-06-2014 bearing notification number G.S.R.413.(E) of the Ministry of Corporate Affairs mentions that:
“Till a registered valuer is appointed in accordance with the provisions of the Act, the valuation report shall be made by an independent merchant banker who is registered with the Securities and Exchange Board of India or an independent Chartered Accountant in practice having a minimum experience of ten years”.
From the above notification, it is clear that, at present the Independent Merchant Banker or an Independent Chartered Accountant in Practice having ten years of experience are allowed to be an Registered Valuer and issue the valuation report under the Companies Act, 2013.
1. Provisions under the Companies Act, 2013 which requires Valuation Report from a Registered Valuer
|
Sl. no. |
Section |
Particulars |
|
1 |
62(1)C |
Valuation report for Further Issue of Shares |
|
2 |
192(2) |
Valuation of Assets Involved in Arrangement of Non cash transactions involving Directors |
|
3 |
230(2)(c)(v) |
Valuation of shares, property and assets of the Company under a scheme of Corporate Debt Restructuring |
|
4 |
230(3) |
Valuation report alongwith Notice of creditors/shareholders meeting –Under scheme of compromise/Arrangement. |
|
5 |
232(2(d) |
The report of the expert with regard to valuation, if any, would be circulated for meeting of creditors/Members |
|
6 |
232(3)(h) |
The Valuation report to be made by the tribunal for exit opportunity to the shareholders of transferor Company –Under the scheme of Compromise/Arrangement in case the Transferor company is Listed Company and the Transferee-company is an unlisted Company. |
|
7 |
236(2) |
Valuation of equity shares held by the Minority Share Holders. |
|
8 |
260(2) ( C) |
Preparing valuation report in respect of shares and assets to arrive at the reserve price for company Administrator |
|
9 |
281(1) |
Valuing assets for submission of report by liquidator |
|
*10 |
305(2)(d) |
Report on the assets of the Company for preparation of declaration of solvency under voluntary Winding Up |
|
*11 |
319(3)(b) |
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. |
NOTE:
* These sections 305(2)(d) and 319(3)(b) along with sections 304 to 323 are omitted after notification of section 255 (Eleventh Schedule) of the Insolvency and Bankruptcy Code 2016.
2. Under Insolvency and Bankruptcy Code, 2016
The Registered valuer under the Companies Act is also recognised under:
1. Regulation 2(h) of IBBI (Liquidation process) Regulations, 2016
2. Regulation 2(m) of IBBI (CIRP) Regulations, 2016
3. Regulation nos. 3(1)(b)(ii) and 38(1)(c)(iv) of IBBI (Voluntary Liquidation Process) Regulations, 2017.
Way Ahead
The scope for registered valuers is very large. Any person who will clear the valuation exam and other conditions will have a good scope for practice in valuation. It is also a very onerous task and saddled with lot of responsibilities.
Some of the Legislations where valuation is required:
1. Companies Act, 2013
2. Insolvency and Bankruptcy Code, 2016
3. SEBI Act, 1992 (Financial Valuation) under
1. Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016 and
2. Securities and Exchange Board of India (Real Estate Investment Trusts) (Amendment) Regulations, 2016.
4. Insurance Act (General Insurance) etc.
In days to come, will keep sharing more on this.