Valuation Under Companies Act, 2013

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Valuation Under Companies Act, 2013

The Companies Act, 2013 provides statutory backing to the Valuation, its required that in respect of valuation of any property, stocks, shares , debentures, securities or goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities under the provision of this Act

Restriction on Non-cash Transactions involving Directors

A company could enter into an arrangement by which a director of the company or its holding, subsidiary or associate company or a person connected with him/her on the company itself acquires/is to acquire assets for consideration other than cash. In such cases the value of the assets has to be calculated by a Registered Valuer.

Power to compromise or make arrangements with creditors and members (Including Merger and Amalgamation of Companies)

In case a compromise or an arrangement is proposed between a company and its creditors or between a company and its members , then an application could be made to National Company law Tribunal (NCLT) which could order a meeting of the creditors or members involved in such an arrangement.The application to the NCLT should, inter alia, include a valuation report in respect of the shares and property and all assets , tangible and intangible, movable and immovable , of the company  by a registered valuer.

Purchase of Minority Shareholding

In case an acquirer or any person becomes a registered holder of 90 percent or majority of equity share capital of a company by virtue of an amalgamation, shares exchange, conversion of securities or by any other reason , then such a holder should notify the company of its intention to buy the remaining equity shares (minority shareholders). The minority shareholders are required to be paid for the equity shares held by them at a price determined on the basis of valuation by the registered valuer.

Submission of report by a company liquidator

In case the NCLT has made a winding up order or has appointed a company liquidator , then such a company liquidator is required to submit a report to the NCLT which should, interalia , include the value of the assets held by the company. The valuation of the assets should be obtained from the registered valuer.

Declaration of solvency in case of proposal to wind up voluntarily

In case of Voluntarily winding up of a Company, a declaration by its directors is required which should affirm that the full enquiry of the company’s affairs have been done by them and the company does not have any debt or they will be able to pay its debts in full form the proceeds of assets sold in voluntary winding up.
Such a declaration would be valid only if it meets the prescribed conditions which, inter alia, includes report of the valuation of the assets of the company prepared by a registered valuer.

Security for companies inviting secured public deposits

In case a company is inviting secured deposits and provides for security by way of a charge on its assets as referred to in Schedule III of the act excluding Intangible Assets of the company for the repayment of the amount of deposit and interest thereon, such issue of secured deposits shall not exceed the value of relevant assets.
Such a valuation is required to be conducted by a registered valuer.

Valuation for the purpose of issue of Sweat Equity

A company other than a listed company, which is not required to comply with the Securities and Exchange Board of India Regulations on sweat equity, shall not issue sweat equity shares to its directors or employees at a discount or for consideration other than cash, for their providing know-how or making available rights in the nature of intellectual property rights or value additions.
The sweat equity shares to be issued shall be valued at a price determined by a registered valuer as the fair price giving justification for such valuation.
The valuation of intellectual property rights or of know how or value additions for which sweat equity shares are to be issued, shall be carried out by a registered valuer, who shall provide a proper report addressed to the Board of directors with justification for such valuation.

Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees.

An Unlisted company may make a provision of money for the purchase of, or subscription for, its shares or its holding company, if the purchase of, or the subscription for, the shares by trustees is for the shares to be held by or for the benefit of the employees of the company.
The valuation at which shares are to be purchased shall be made by a registered valuer

Further Issue of Share Capital

If any company proposes to issue new shares (except a rights issue to existing shareholders or to employees Section 62 (1) (c)*  Issue of new shares under employees stock options), the price of such shares should be determined by the valuation report of a Registered Valuer.

Registered Valuer applicability under Insolvency & Bankruptcy Code, 2016

Appointment of Registered Valuers

Resolution professional shall appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with Regulation 35

Valuation of assets or business intended to be sold

In cases not covered under Reg 35 (1), the liquidator shall appoint two registered valuers to determine the realizable value of the assets or businesses under clauses (a) to (f) of regulation 32 of the corporate debtor

Appointment of Registered Valuers

Resolution professional shall appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with Regulation 34

Voluntary Liquidation of Corporate Persons

In case of voluntary liquidation proceedings Corporate Debtor have to file a report of the valuation of the assets of the company prepared by a registered valuer

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