SPECIFIC PROVISIONS UNDER THE COMPANIES ACT, 2013 WHICH REQUIRE VALUATION REPORT FROM A REGISTERED VALUER : ALL YOU NEED TO KNOW

SPECIFIC PROVISIONS UNDER THE COMPANIES ACT, 2013 WHICH REQUIRE VALUATION REPORT FROM A REGISTERED VALUER : ALL YOU NEED TO KNOW

SPECIFIC PROVISIONS UNDER THE COMPANIES ACT, 2013 WHICH REQUIRE VALUATION REPORT FROM A REGISTERED VALUER: ALL YOU NEED TO KNOW

S. No.   Section Purpose   Details
1. 62(1)C Issue of Shares /convertible securities on a preferential basis by the unlisted company for cash or for consideration other than cash

Whereat any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered to any persons, if it is authorized by a special resolution, whether or not those persons include the persons referred to in clause 62 (a) or clause 62 (b), either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer subject to such conditions as may be prescribed.

2. 177 (4) (vi) Terms of Reference of Audit Committee

Every Audit Committee shall act in accordance with the terms of reference specified in writing by the Board which shall, inter alia, include, — valuation of undertakings or assets of the company, wherever it is necessary.

3. 192(2) Non-cash transactions with Directors for acquiring assets from the company

Restriction on non-cash transactions involving directors. The notice for approval of the resolution by the company or holding company in the general meeting under subsection 192 (1) shall include the particulars of the arrangement along with the value of the assets involved in such arrangement duly calculated by a registered valuer.

4. 230(2)(c)(v) Power to compromise or make arrangements with creditors and members.

In case of

a) a compromise or arrangement between members (such as in mergers or amalgamations)
b) or with creditors (such as in corporate debt restructuring),

A valuation report in respect of shares, property or assets, tangible and intangible, movable and immovable of the company, or a swap ratio report by a Registered Valuer is required.

5. 230(3) Power to compromise or make arrangements with creditors and members.

In case of

a) a compromise or arrangement between members (such as in mergers or amalgamations)
b) or with creditors (such as in corporate debt restructuring),

A valuation report in respect of shares, property or assets, tangible and intangible, movable and immovable of the company, or a swap ratio report by a Registered Valuer is required.

6. 232(2)(d) Merger and amalgamation of companies.

In case of

a) a compromise or arrangement between members (such as in mergers or amalgamations)
b) or with creditors (such as in corporate debt restructuring),

A valuation report in respect of shares, property or assets, tangible and intangible, movable and immovable of the company, or a swap ratio report by a Registered Valuer is required.

7. 232(3)(h) Merger and amalgamation of companies.

In case of

a) a compromise or arrangement between members (such as in mergers or amalgamations)
b) or with creditors (such as in corporate debt restructuring),

A valuation report in respect of shares, property or assets, tangible and intangible, movable and immovable of the company, or a swap ratio report by a Registered Valuer is required.

8. 236(2) Purchase of minority shareholding.

The acquirer, person, or group of persons under sub-section 236 (1) shall offer to the minority shareholders of the company for buying the equity shares held by such shareholders at a price determined on the basis of valuation by a registered valuer in accordance with such rules as may be prescribed.

9. 247 Valuation by Registered Valuers.

(1)Where a valuation is required to be made in respect 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, it shall be valued by 1

[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 that company.

(2)The valuer appointed under sub-section (1) shall,—

(a)make an impartial, true, and fair valuation of any assets which may be required to be valued;
(b)exercise due diligence while performing the functions as a valuer;

(c)make the valuation in accordance with such rules as may be prescribed;
and
(d)not undertake valuation of any assets in which he has a direct or indirect interest or becomes so interested at any time [during a period of three years prior to his appointment as valuer or three years after the valuation of assets was conducted by him.]
(3)If a valuer contravenes the provisions of this section or the rules made thereunder, the valuer shall be punishable with a fine which shall not be less than twenty-five thousand rupees, but which may extend to one lakh rupees:
Provided that if the valuer has contravened such provisions with the intention to defraud the company or its members, he shall be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
(4) Where a valuer has been convicted under sub-section (3), he shall be liable to— (i)refund the remuneration received by him to the company; and
(ii)pay for damages to the company or to any other person for loss arising out of incorrect or misleading statements of particulars made in his report.

10. 281(1) (a) Submission of report by Company Liquidator in case of winding up Order by NCLT

The nature and details of the assets of the company including their location and value, stating separately the cash balance in hand and in the bank, if any, and the negotiable securities, if any, held by the company: Provided that the valuation of the assets shall be

obtained from registered valuers for this purpose.

11. Rule 2 (c) (ix) of Companies (Acceptance of Deposit) Rules, 2014

Exclusions from Deposits. by the issue of debentures secured by a charge on the company’s assets. The amount of such debentures shall not exceed the market value of the assets as determined by a Registered Valuer.

12. Rule 8 (6), (7), (9) & (12) of Companies (Share Capital and Debentures) Rules, 2014

Issue of Sweat Equity Shares

This rule applies to all companies except listed companies issuing sweat equity shares to its directors or employees.
a) The rule prescribes that the sweat equity shares shall be issued at a price determined by a registered valuer as the fair price giving justification for such valuation.
b) the value of the intellectual property or know-how or any other value additions, for which the sweat equity shares have been issued to its directors or employees shall be determined by a valuation report of a registered valuer.
c) If the sweat equity shares are issued for non-cash consideration, the value of such non-cash consideration shall be based on a valuation report by a registered valuer.
d) Additionally, if the sweat equity shares are issued pursuant to the acquisition of an asset, the value of such asset shall also be determined based on a valuation report by a registered valuer.

13. Rule 12 (5) of the Companies

Return of Allotment A report of a registered valuer in respect of valuation of the consideration shall also be attached

(Prospectus and Allotment of Securities) Rules, 2014

along with the contract as mentioned in sub-rule (3) and sub-rule (4)

14. Rule 13 (1) of the Companies (Share Capital and Debentures) Rules, 2014

Issue of shares on preferential basis

Provided further that the price of shares to be issued on a preferential basis by a listed company shall not be required to be determined by the valuation report of a registered valuer.

15. Rule 16 (1) (c) of the Companies (Share Capital and Debentures) Rules, 2014

Provision of Money by Company for Purchase of its Own Shares by Employees or by Trustees for the Benefit of Employees

Provision of money by the company for the purchase of its own shares by employees or by trustees for the benefit of employees – where shares of a company are not listed on a recognized stock exchange, the valuation at which shares are to be purchased shall be made by a registered valuer;

16. Rule 6 of Companies (Acceptance of Deposit) Rules, 2014

Creation of Security Provided that in the case of deposits which are secured by the charge on the assets referred to in Schedule III of the Act excluding intangible assets, the amount of such deposits and the interest payable thereon shall not exceed the market value of such assets as assessed by a registered valuer.

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