REGISTERED VALUERS AND VALUATION

The Valuation is new concept for Indian companies’ law. We will discuss it under this blog post.

REGISTERED VALUERS (SECTION 247):

Where a valuation is required to be made in respect of any property, stocks, shares, debentures, securities, goodwill, or any other assets or any liability or net worth of a company, it shall be valued by a Registered Valuer and appointed by the Audit committee or Board of Directors of the company.

The valuer shall have qualification and experience as valuer. The valuer should be registered as registered valuer.

The valuer shall have following duties:

(a)  make an impartial, true and fair valuation of any assets;

(b) exercise due diligence while performing the function as valuar;

(c)  make the valuation in accordance with the rules;

(d)  not undertake valuation of any assets in which he has a direct or indirect interest or becomes so interested –

1. at any time during the valuation;
2. at any time after the valuation.

If a valuer contravenes the provisions, tha valuer shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to one lakh rupees.

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.

A valuer after conviction shall be liable to –

(a)  refund the remuneration received by him to the company; and

(b) 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.

This section make it clear, whenever a required for valuation may arise for a company, it shall appoint a Registered Valuer for this purpose. However, we may find some special mention for registered vauler in the Act. Let us discuss.

EXPERT:

The definition of Expert under Clause 38 of Section 2 includes a valuer as an expert.

FURTHER ISSUES OF SHARE CAPITAL (SECTION 62):

Where a company proposes to increase its subscribed capital by issue of further shares, such shares may be offered to any person if the price of such shares is determined by the valuation report of a registered valuer.

NON CASH TRANSACTIONS INVOLVING DIRECTORS (SECTION 192):

This is required to obtain a prior approval for some arrangement with directors is accorded by the company in general meeting. The notice for approval of the resolution shall include particulars of the arrangement along with the value of the assets involved duly calculated by a registered valuer.

COMPROMISE OR ARRANGEMENT (SECTION 230):

Where a compromise or arrangement is proposed, the company or any other person shall make an application before the Tribunal for calling of a meeting of members, class of members, creditors or class of creditors. The applicant shall disclose to the Tribunal all information including a valuation report in respect of the shares and the property and all assets, tangible and intangible, movable and immovable of the company by a registered valuer.

PURCHASING OF MINORITY SHARES (SECTION 236):

The acquirer, person or group of person shall offer to the minority shareholders for buying their shares at a price determined on the basis of valuation by a registered valuer.

The minority shareholder may also offer their share to majority shareholders at the price determined on the basis of valuation by a registered valuer.

SUBMISSION OF REPORT BY COMPANY LIQUIDATOR (SECTION 281):

Where the Tribunal has made a winding up order or appointed a Company Liquidator, the liquidator shall within sixty days from the order, submit to the Tribunal a reporting containing among other things the nature and details of the assets of the company including location and value. The valuation of the assets shall be obtained from registered valuers for this purpose.

DECLARATION OF SOLVENCY (SECTION 305):

Where it is proposed to wind up a company voluntary, majority of its directors shall make a declaration verified by an affidavit to the effect that they have made a full inquiry into the affairs of the company and they have formed an opinion that the company has no debt or it will be able to pay its debts in full from the proceeds of assets sold in voluntary winding up.

The declaration shall, among other things, accompanied by a report of the valuation of the assets of the company prepared by a registered valuer.

POWER OF COMPANY LIQUIDATOR (SECTION 319):

A member of a company who did not vote in favour of the special resolution for transfer or sale of property of the company and express dissent in writing addressed to the Company Liquidator, may require the liquidator either –

(a)   to abstain from carrying the resolution into effect; or

(b) to purchase his interest at a price determined by agreement or the registered valuer.

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.

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