MCQ-VALUATION STANDARDS AS PER THE PROVISIONS OF THE COMPANIES ACT 2013
1. Which section of the Companies Act, 2013 deals with the valuation by a registered valuer?
a) Section 125
b) Section 247
c) Section 133
d) Section 252
Answer: b) Section 247
2. Who is responsible for appointing a registered valuer according to the Companies Act, 2013?
a) Board of Directors
b) Shareholders
c) Registrar of Companies
d) Ministry of Corporate Affairs
Answer: a) Board of Directors
3. Under the Companies Act, 2013, who must carry out the valuation of any property, stocks, shares, debentures, securities, or goodwill?
a) Chartered Accountant
b) Company Secretary
c) Registered Valuer
d) Auditor
Answer: c) Registered Valuer
4. Which regulatory body oversees the registration of valuers as per the Companies Act, 2013?
a) Securities and Exchange Board of India (SEBI)
b) Reserve Bank of India (RBI)
c) Insolvency and Bankruptcy Board of India (IBBI)
d) Ministry of Finance
Answer: c) Insolvency and Bankruptcy Board of India (IBBI)
5. What is the primary purpose of valuation as defined under the Companies Act, 2013?
a) To assess the company’s market value
b) To estimate the company’s asset value for tax purposes
c) To determine the fair value of assets and liabilities for various transactions
d) To calculate the company’s annual revenue
Answer: c) To determine the fair value of assets and liabilities for various transactions
6. When is the valuation by a registered valuer required as per the Companies Act, 2013?
a) During the issue of shares or debentures
b) In the case of mergers and acquisitions
c) For calculating net worth of the company
d) All of the above
Answer: d) All of the above
7. Which of the following is NOT a requirement for a person to be registered as a valuer?
a) Must be a member of a recognized professional body
b) Must possess necessary qualifications and experience
c) Must be an employee of the company being valued
d) Must be enrolled as a valuer with the IBBI
Answer: c) Must be an employee of the company being valued
8. As per the Companies (Registered Valuers and Valuation) Rules, 2017, which of the following entities is eligible to be registered as a valuer?
a) Individual
b) Partnership entity
c) Company
d) All of the above
Answer: d) All of the above
9. The valuation report by a registered valuer must include which of the following?
a) Date of the report
b) Purpose of valuation
c) Basis and method of valuation
d) All of the above
Answer: d) All of the above
10. What should a registered valuer do if they have a conflict of interest in a particular valuation assignment?
a) Proceed with the valuation as per standard practices
b) Disclose the conflict of interest to the client and continue
c) Refuse to undertake the valuation
d) Seek guidance from IBBI
Answer: c) Refuse to undertake the valuation
11. Who issues the valuation standards to be followed by registered valuers?
a) Ministry of Corporate Affairs
b) Securities and Exchange Board of India
c) Institute of Chartered Accountants of India
d) Insolvency and Bankruptcy Board of India
Answer: d) Insolvency and Bankruptcy Board of India
12. Which of the following is NOT a method of valuation recognized under the Companies Act, 2013?
a) Market Approach
b) Cost Approach
c) Random Approach
d) Income Approach
Answer: c) Random Approach
13. What is the validity period of a valuation report under the Companies Act, 2013?
a) 3 months
b) 6 months
c) 12 months
d) Until the next valuation
Answer: b) 6 months
14. According to the Companies Act, 2013, who is required to maintain a record of the valuation reports?
a) The registered valuer
b) The company
c) The Registrar of Companies
d) The Board of Directors
Answer: b) The company
15. When a company issues shares on a preferential basis, valuation by a registered valuer is required to determine which of the following?
a) Market value
b) Net asset value
c) Fair value
d) Book value
Answer: c) Fair value
16. Which of the following transactions requires valuation by a registered valuer under the Companies Act, 2013?
a) Sale of property
b) Issue of shares
c) Mergers and acquisitions
d) All of the above
Answer: d) All of the above
17. The Companies Act, 2013 mandates valuation by a registered valuer for the transfer of which types of assets?
a) Tangible assets
b) Intangible assets
c) Financial assets
d) All of the above
Answer: d) All of the above
18. Under the Companies Act, 2013, who can be penalized for non-compliance with valuation requirements?
a) Registered valuer
b) Company
c) Directors of the company
d) All of the above
Answer: d) All of the above
19. What is the primary objective of appointing a registered valuer?
a) To ensure accuracy in the valuation process
b) To comply with legal requirements
c) To maintain transparency and fairness
d) All of the above
Answer: d) All of the above
20. As per the Companies (Registered Valuers and Valuation) Rules, 2017, a registered valuer must renew their registration after how many years?
a) 1 year
b) 2 years
c) 3 years
d) 5 years
Answer: c) 3 years
21. Which body provides the National Valuation Standards in India?
a) Institute of Cost Accountants of India
b) Reserve Bank of India
c) Insolvency and Bankruptcy Board of India
d) National Institute of Valuers
Answer: c) Insolvency and Bankruptcy Board of India
22. According to the Companies Act, 2013, can a company appoint more than one registered valuer for a single valuation assignment?
a) Yes
b) No
Answer: a) Yes
23. Which document must be submitted along with the valuation report to the Board of Directors?
a) Declaration of independence by the valuer
b) Valuer’s resume
c) Valuer’s registration certificate
d) All of the above
Answer: a) Declaration of independence by the valuer
24. In the event of a dispute regarding valuation, which authority can be approached for resolution?
a) National Company Law Tribunal (NCLT)
b) Securities and Exchange Board of India (SEBI)
c) Reserve Bank of India (RBI)
d) Supreme Court of India
Answer: a) National Company Law Tribunal (NCLT)
25. Can a registered valuer delegate their valuation assignment to another person?
a) Yes
b) No
Answer: b) No
26. Which of the following is NOT an approach used by valuers in valuation?
a) Comparable Companies Approach
b) Asset-Based Approach
c) Arbitrary Valuation Approach
d) Discounted Cash Flow Approach
Answer: c) Arbitrary Valuation Approach
27. What must be disclosed in a valuation report as per the Companies Act, 2013?
a) Assumptions and limitations
b) Valuer’s qualifications
c) Basis of valuation
d) All of the above
Answer: d) All of the above
28. Which form is used for filing the details of registered valuer with the Registrar of Companies?
a) MGT-7
b) AOC-4
c) DIR-12
d) INC-23
Answer: d) INC-23
29. What happens if a registered valuer fails to comply with the valuation standards?
a) They may be penalized
b) Their registration may be suspended
c) They may be barred from future valuations
d) All of the above
Answer: d) All of the above
30. The term “fair value” in valuation refers to:
a) The highest value possible
b) The lowest value possible
c) The estimated market price agreed by willing buyers and sellers
d) The original purchase price
Answer: c) The estimated market price agreed by willing buyers and sellers
31. Can a registered valuer value the assets of a company in which they have a financial interest?
a) Yes
b) No
Answer: b) No
32. What is required for a person to be recognized as a registered valuer?
a) Educational qualifications
b) Professional experience
c) Membership in a professional institution
d) All of the above
Answer: d) All of the above
33. Which section of the Companies Act, 2013, specifies the rules regarding the valuation by registered valuers?
a) Section 62
b) Section 73
c) Section 247
d) Section 134
Answer: c) Section 247
34. For which type of company is the valuation by a registered valuer mandatory?
a) Private companies
b) Public companies
c) One Person Companies
d) All companies
Answer: d) All companies
35. Which of the following transactions does not typically require a valuation by a registered valuer?
a) Issue of sweat equity shares
b) Buy-back of shares
c) Annual audit
d) Mergers and acquisitions
Answer: c) Annual audit
36. Under the Companies Act, 2013, valuation reports must be presented in which format?
a) Oral report
b) Email communication
c) Written report
d) Any format acceptable to the Board
Answer: c) Written report
37. What is the role of a registered valuer in corporate insolvency resolution processes?
a) To assess the fair value of assets
b) To oversee the liquidation process
c) To represent creditors
d) To manage the debtor’s assets
Answer: a) To assess the fair value of assets
38. Valuation standards aim to ensure which of the following?
a) Consistency
b) Reliability
c) Transparency
d) All of the above
Answer: d) All of the above
39. What should a valuation report include about the valuer’s independence?
a) Confirmation of independence
b) Details of any conflicts of interest
c) Steps taken to mitigate conflicts
d) All of the above
Answer: d) All of the above
40. Which of the following assets require valuation in case of a merger?
a) Real estate
b) Intellectual property
c) Stock
d) All of the above
Answer: d) All of the above
41. Can a registered valuer be a relative of a director of the company they are valuing?
a) Yes
b) No
Answer: b) No
42. What does “fair value” ensure in terms of financial reporting?
a) Maximum profit reporting
b) Accurate and honest representation of asset value
c) Minimum tax liabilities
d) Maximum investor returns
Answer: b) Accurate and honest representation of asset value
43. The valuation standards set by the IBBI are intended to be followed by which professionals?
a) Auditors
b) Registered valuers
c) Company secretaries
d) Financial analysts
Answer: b) Registered valuers
44. A valuation report is considered valid if it is signed by:
a) Any director of the company
b) The registered valuer
c) The company secretary
d) The auditor
Answer: b) The registered valuer
45. When determining fair value, what should be considered?
a) Market conditions
b) Asset’s potential use
c) Demand and supply factors
d) All of the above
Answer: d) All of the above
46. How often should a registered valuer update their knowledge and skills?
a) Annually
b) Biennially
c) As per professional development requirements
d) Only when required by the company
Answer: c) As per professional development requirements
47. According to the Companies Act, 2013, the Board of Directors must ensure that the valuer is:
a) Affordable
b) Independent
c) Experienced
d) All of the above
Answer: b) Independent
48. What action should be taken if a company finds that the valuation report is not accurate?
a) Ignore the discrepancies
b) Seek a second opinion
c) Report the issue to the IBBI
d) Use the report anyway
Answer: b) Seek a second opinion
49. Valuation by a registered valuer is required for which type of company restructuring?
a) De-mergers
b) Capital reduction
c) Buy-back of shares
d) All of the above
Answer: d) All of the above
50. Can a registered valuer use historical cost for valuation purposes?
a) Yes, if it is the most appropriate method
b) No, always use fair value
c) Only for tangible assets
d) Only for intangible assets
Answer: a) Yes, if it is the most appropriate method
