Registered valuer under companies act, 2013

CA Deepesh Ruhela (Keen to Learn) (3271 Points)

07 December 2013  

Registered Valuer under Companies Act, 2013

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

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

III.Registered Valuer shall make valuation of any asset in accordance with any one or more of the following methods-

 
  • Net Asset Value Method (NAV)

 
  • Market Price Method

 
  • Yield Method / PECV Method

 
  • Discounted Cash Flow Method (DCF)

 
  • Comparable Companies Multiples Method (CCM)

 
  • Comparable Transaction Multiples Method (CTM)

 
  • Price of Recent Investment Method (PORI)

 
  • Sum of the parts Valuation Method (SOTP)

 
  • Liquidation Value

 
  • Weighted Average Method

 
  • Any other method accepted or notified by RBI, SEBI or Income Tax Authorities

 
  • Any other method that valuer may deem fit provided adequate justification for use of such 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

Registered Valuers (Forms) – Contents of Valuation report

(1) Descripttion of valuation engagement
 

(a). Name of the client:
 

(b). Other intended users:
 

(c). Purpose for valuation:

 

(2) Descripttion of business/ asset / liability being valued
 

(a). Nature of business or asset / liability
 

(b). Legal background
 

(c). Financial aspects
 

(d). Tax matters

(3) Descripttion 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

(4) Descripttion of specific valuation of assets used in the business:
 
  1. Basis or bases of value
 
  1. Valuation Date
 
  1. Descripttion of the procedures carried out
 
  1. Principles used in the valuation
 
  1. The valuation method used and reasoning
 
  1. Nature, scope and quality of underlying data
 
  1. 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

(iii).

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

Source: https://corporatevaluations.in