Valuation reports- MB/RV/CA
OBJECTIVE
It is important to understand the importance of the Valuation Report especially for Startups. Gone are the ad-hoc frameworks which were managed by the Companies Act. To implement the new guidelines and proper framework, the government introduced Insolvency and Bankruptcy Board of India (IBBI) whose basic objective was to standardize the valuation criteria and authority to govern the Registered Valuers.
INTRODUCTION AND STANDARDIZATION
Ministry of corporate affairs (MCA) came up with Companies (Registered Valuers and Valuation) Rules 2017 which provided the eligibility criteria to be fulfilled after which the registration certificate will be granted to a person and thereafter he will become a Registered Valuer (RV). In addition, IBBI was established as Registering authority and responsibilities in relation to conduct of examinations and granting of certificates were assigned to it. Thereby SEBI regulations came into force from February 1, 2019 where it was made a mandate that valuation is to be undertaken by a Registered Valuer only.
Generally, valuations are done for assets, liabilities, shares etc.
Qualification & Disqualification
QUALIFICATION REQUIRED FOR REGISTERED VALUER
- He/ she should possess certain qualification and education.
- Obtain membership from recognized Institutions.
- Get himself registered with Insolvency and Bankruptcy Board of India(IBBI) as a valuer.
DISQUALIFICATION
It is important to note that a valuer should not have any direct and indirect interest in certain class of assets for which he would be issuing reports which may jeopardize the contents of Report.
DIFFERENT QUALIFICATION FOR DIFFERENT CLASS OF ASSETS
- Land and Building– Graduate or Post graduate in Civil engineering, architecture (Minimum experience – 3 years)
- Plant and Machinery– Graduate and Post graduate in Electrical and Mechanical engineering (Minimum experience- 3 years)
- Securities or financial assets– Chartered Accountant/ Company Secretary/ MBA (Minimum experience- 3 years)
Any misconduct and negligence will be the sole responsibility of Registered Valuer and disciplinary actions may be initiated against them.
What has changed since beginning?
From past very long Valuation services were majorly performed by Chartered accountants (CA) and Merchant Bankers (MB).They issued valuation certificates under the Companies Act and other laws.But, the need of an hour was a standardized formula. Now as per the rules and IBBI as the sole authority, valuation aspects are well- regulated.
The MCA has constituted a well organised committee for valuations, standards, policies for compliance by companies and Registered Valuers. Institute of Chartered Accountants of India has also established Valuation Standard Board which will remain effective till valuation standard are being notified by the MCA.
WHERE VALUATIONS REPORTS ARE REQUIRED
Some common cases are mention in which valuation reports by Registered Valuers (RV) / Chartered Accountants (CA) / Merchant Bankers (MB) are required under the law of lands for start-ups.
- Fresh Issue/ Preferential Allotment of Shares by Private Company/Unlisted Company.
- Employees Stock Purchase Scheme
- Sweat Equity Issue
- Amalgamation and Mergers
- Corporate Debt Restructuring
- Private Placement
Expect the best from us
WE ARE THE LEADERS IN THECFO Services!
It may vary from law to law and document to document which person is best suitable for valuation. While it may be a costly affair if you fall in wrong hands while getting your Valuation Reports. We are having multiple RV’s/CA’s/MB’s on board with us who can help you with the Valuation Reports.