Scope of Valuation under Companies Act, 2013

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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Disclaimer:

The opinions expressed herein are those of the contributors (which shall, for these purposes, include guests) in their personal capacity and do not, in any way or manner, reflect the views of the organizations that the contributors are presently associated with, or that have previously employed or retained the contributors. Postings on this blog are for informational purposes only. Nothing herein shall be deemed or construed to constitute legal or investment advice. Discussions on, or arising out of this, blog between contributors and other persons shall not create any attorney-client relationship.

 

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