Scope of Valuation under Companies Act, 2013
The Ministry Corporate Affairs (MCA) has, since October 2017, notified Section 247 of the Companies Act, 2013 and introduced the Companies (Registered Valuers and Valuation) Rules, 2017. The MCA has designated the Insolvency and Bankruptcy Board of India (IBBI) as the authority for implementing the new regime of Registered Valuers apart from insolvency resolution professionals.
Transitional Provision
- Any person, who may be rendering valuation services under Act, on the date of commencement of these rules, may continue to render valuation service without a certificate of registration under these rules upto 31st Jan, 2019:
- Provided that if a company has appointed any valuer before such date and the valuation or any part of it has not been completed before 31st January, 2019, the valuer shall complete such valuation or such parth with three months thereafter.
That means valuation assignment after 30th April in CA, 2013 is to be done by a register valuer only.
Valuation required under Companies Act, 2013 for unlisted companies:
| Section | Particulars |
| 39(4) | Allotment of securities for consideration other than cash |
|
54 [rule 8] |
Issue of sweat equity shares |
| 177(4)(iv) | For valuation of undertaking or assets of company |
| 42 | Private Placement of shares |
| 62(1)(c) | Further issue of shares- Preferential issue of shares |
|
67[rule 16] |
Provision of Money by Company for Purchase of its Own Shares by Employees or by Trustees for the Benefit of Employees |
|
191 [rule 17] |
Payment [other than in cash] to directors by way of compensation. |
| 192(2) | Non Cash transaction involving directors |
| 230(2)(c)(v) | Valuing under a Scheme of Corporate Debt Restructuring |
| 230(11) | Offer of takeover of an unlisted co. as a result of Compromise or Arrangement |
| 230(3) | Under scheme of Compromise or Arrangement with creditors and members [including swap ratio] |
| 232(2)(d) | For reconstruction of com involving Merger, Amalgamation or Demerger |
| 232(3)(h) | Valuation may be required by the Tribunal to provide exist for dissenting shareholders of transferor co. |
| 236(2) |
Purchase of minority shareholding [For Valuing Equity Shares held by Minority Shareholders] |
| 281(1) | Valuing assets for submission of report by Company liquidator to NCLT |
| Exclusions from deposits – Rule 2(c)(ix) of the Companies (Acceptance of Deposit) Rules, 2014 | |
| Creation of security- Rule 6(1) of the Companies (Acceptance of Deposit) Rules, 2014 |
Following transaction in companies act where no register valuation required
- Rights Issue
- Bonus issue
- Buyback of shares
- Employee stock option plan
- Conversion of debt to equity
- Fairness opinion on scheme of Merger or Amalgamation
Author:
Nitin Pahilwani
Chartered Accountant
Email: info@npahilwani.com
Web: www.npahilwani.com
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