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A Person resident in India who has made ODI in a foreign entity, in case of diminution of such investment where the corresponding original investment is more than USD 10 Million or in case where the amount of such diminution exceeds 20% of the total value of the outstanding dues towards the Indian entity or investor, the diminution in value shall be duly certified on an arm length basis by a Registered Valuer as per the Companies Act, 2013.
If any Company proposes to issue new shares on preferential basis, the price of such shares should be determined by the valuation report of a Registered Valuer and the price of shares or other securities to be issued on preferential basis shall not be less than the price determined on the basis of the valuation report [Section 62(1)(c)].
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 or 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 [Section 192(2)].
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 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 [Section 230(2)(v), 230(3) & 232]
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 [Section 236(2)].
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 include the value of the assets held by the company. The valuation of the assets should be determined by a registered valuer [Section 281 (1) (a)].
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 includes report of the valuation of the assets of the company prepared by a registered valuer [Section 305 (2)].
Valuation under different Acts i.e. the Companies Act, 2013, Income Tax Act, 1961 and Foreign Exchange Management Act, 1999 Till the introduction of the Companies Act, 2013 (Act 2013), the valuation of shares, assets, net worth of companies etc. was conducted by Chartered Accountants or as prescribed by other laws such as the Foreign Exchange Management Act, 1999 (FEMA) and the regulations made thereunder or the Income Tax Act, 1961 (IT Act). Under Companies Act, 2013. There was no provision in the earlier company law i.e. the Companies Act, 1956 for valuation or specified the persons who could conduct valuation of companies, shares etc. The concept of a “Registered Valuer” under Indian law was introduced for the first time vide Section 247 of Chapter XVII of the Act, 2013 for matters requiring valuation under the said act.
