Companies (Registered Valuers and Valuation) Rules, 2017
MCA has notified October 18, 2017, as the date on which the provisions of Section 247 of the Companies Act, 2013 (“Act”) shall come into force.
In terms of the aforesaid Section 247, if the property, stocks, shares, debentures, securities or goodwill or any other assets (“Assets”) or net worth of a company or its liabilities are required to be valued under the provision of the Act, it shall be valued by a person having such qualifications and experience and registered as a valuer in such manner, on such terms and conditions as may be prescribed and appointed by the audit committee or in its absence by the board of directors of such company.
The MCA has also notified the Companies (Registered Valuers and Valuation) Rules, 2017 (“Rules”), which will come into force retrospectively from October 18, 2017.
The salient features of the Rules are as follows.
- Eligibility criteria for individuals:
A person shall be eligible to be a registered valuer if he, inter alia, is
- a member of a Registered Valuers Organization (“RVO”);
- is recommended by the RVO of which he is a valuer member for registration as a valuer;
- has passed the valuation examination within three years of the date of making an application for registration and possesses the qualifications and experience as specified in the Rules.
- Eligibility criteria for partnership entities and companies:
No partnership entity or company shall be eligible to be a registered valuer if:
- it has been set up for objects other than for rendering professional or financial services, including valuation services;
- where such applicant is a company, it is not a subsidiary, joint venture or associate of another company or body corporate; or
- if three or all the partners or directors, of the partnership entity or company, as the case may be, are not registered valuers.
- Compliance with standards:
The registered valuer shall comply with the valuation standards as per (i) internationally accepted valuation standards, and (ii) valuation standards adopted by any RVO. The Central Government is yet to notify the valuation standards.
- Report of the valuer:
The report of the valuer shall state matters such as background information of the asset being valued, inspections and/or investigations undertaken, procedures adopted in carrying out the valuation and valuation standards followed, restrictions on use of the report, if any, and caveats, limitations and disclaimers to the extent they explain or elucidate the limitations faced by valuer. However, such limitations, caveats and disclaimers shall not limit his responsibility for the valuation report.
- Penalty for contravention:
If the valuer contravenes the provision of the Section or the rules made thereunder, the valuer shall be punishable with fine of Rs. 25,000 to Rs. 1,00,000. Further, if a valuer has been convicted, he shall be liable to refund the remuneration received by him to the company and pay for the damages to the company or to any other person for loss arising out of incorrect or misleading statements of particulars made in his report.