Registered Valuers is a new concept in Indian corporate law introduced by the Companies Act, 2013. Earlier for various purposes like wealth tax assessment, we had different valuers. Chapter XVII, Section 247 of the Companies Act, 2013 make law for registered valuers. Years earlier, we have discussed section 247 here. Now, section 247 comes into force along with a removal of difficulty order, a delegation of powers, its rules, in October 2017.
Enforcement of provision
Central Government issued a notification dated 18th October 2017 to appoint that date on which the provisions of section 247 of the Companies Act, 2013 come into force. The government notified the Companies (Registered Valuers and Valuation) Rules, 2017 with effect from even date – 18th October 2017. We will discuss these later.
Removal of Difficulties
Since enactment of the Companies Act, 2013 several things have been changes. Valuation becomes more relevant for the Insolvency and Bankruptcy Code, 2016. All three professions under MCA have their claim in the regulation of the new profession of valuers.
According to original sub – section (1) of Section 247, discussed earlier here, 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 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.
The Companies (Removal of Difficulties) Second Order, 2017 with effect from 23rd October 2017 amended section 247(1) as under:
“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 a person having such qualifications and experience and registered as a valuer in such manner, on such terms and conditions as may be prescribed a person having such qualifications and experience, registered as a valuer and being a member of an organisation recognised, 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.”
Delegation of Powers
On 23rd October 2017, Central Government delegated the powers and functions vested in it under section 247 of the Companies Act, 2013 to the Insolvency and Bankruptcy Board of India with effect from that date.
Eligibility for registered valuers
According to Rule 3(1) of the Companies (Registered Valuers and Valuation) Rules, 2017, A person shall be eligible to be a registered valuer if he-
(a) is a valuer member of a registered valuers organisation;
(b) is recommended by the registered valuers organisation of which he is a valuer member for registration as a valuer;
(c) has passed the valuation examination within three years preceding the date of making an application;
(d) possesses the qualifications and experience;
(e) is not a minor;
(f) has not been declared to be of unsound mind;
(g) is not an undischarged bankrupt, or has not applied to be adjudicated as a bankrupt;
(h) is a person resident in India;
(i) has not been convicted by any competent court for an offence punishable with imprisonment for a term exceeding six months or for an offence involving moral turpitude, and a period of five years has not elapsed from the date of expiry of the sentence. If a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be registered;
(j) has not been levied a penalty under section 271J of Income-tax Act, 1961 (43 of 1961) and time limit for filing appeal before Commissioner of Income-tax (Appeals) or Income-tax Appellate Tribunal, as the case may be has expired, or such penalty has been confirmed by Income-tax Appellate Tribunal, and five years have not elapsed after levy of such penalty; and
(k) is a fit and proper person. An individual is a fit and proper person under these rules, the authority may take account of any relevant consideration, including but not limited to the following criteria-
(i) integrity, reputation and character,
(ii) the absence of convictions and restraint orders, and
(iii) competence and financial solvency.
Eligibility for registered valuers entity
According to Rule 3(2), a partnership entity or company shall be eligible to be a registered valuer if-
(a) it has been set up for objects of rendering professional or financial services and is not a subsidiary, joint venture or associate of another company or body corporate;
(b) it is undergoing an insolvency resolution or is an undischarged bankrupt;
(c) all the partners or directors, as the case may be, are not ineligible under clauses (c), (d), (e), (g), (h), (i), (j) and (k) of sub-rule (1);
(d) at least three or all the partners or directors are registered valuers; or
(e) at least one of its partners or directors, as the case may be, is a registered valuer for the asset class, for the valuation of which it seeks to be a registered valuer.
Qualifications and experience
According to Rule 4, an individual shall have the following qualifications and experience to be eligible for registration under rule 3, namely:-
(a) post-graduate degree or post-graduate diploma, in the specified discipline, from a University or Institute, established, recognised or incorporated by law in India and at least three years of experience in the specified discipline thereafter; or
(b) a Bachelor’s degree or equivalent, in the specified discipline, from a University or Institute, established, recognised or incorporated by law in India and at least five years of experience in the specified discipline thereafter; or
(c) membership of a professional institute established by an Act of Parliament enacted for the purpose of regulation of a profession with at least three years’ experience after such membership and having qualification mentioned at clause (a) or (b).
According to Rule 5(1), the authority shall, either on its own or through a designated agency, conduct valuation examination for one or more asset classes, for individuals, who possess the qualifications and experience and have completed their educational courses as member of a registered valuers organisation, to test their professional knowledge, skills, values and ethics in respect of valuation. The authority may recognise an educational course conducted by a registered valuers organisation before its recognition as adequate for the purpose of appearing for valuation examination. The authority may recognise an examination conducted as part of a master’s or postgraduate degree course conducted by a University which is equivalent to the valuation examination.
According to Rule 5(2), the authority shall determine the syllabus for various valuation specific subjects or assets classes for the valuation examination on the recommendation of one or more Committee of experts constituted by the authority in this regard.
The syllabus, format and frequency of the valuation examination, including qualifying marks, shall be published on the website of the authority at least three months before the examination. An individual who passes the valuation examination shall receive acknowledgement of passing the examination. An individual may appear for the valuation examination any number of times.
Application for certificate of registration
According to rule 6(1), an individual eligible for registration as a registered valuer under rule 3 may make an application to the authority in Form-A along with a non-refundable application fee of five thousand rupees in favour of the authority.
A partnership entity or company eligible for registration as a registered valuer under rule 3 may make an application to the authority in Form-B of Annexure-II along with a non-refundable application fee of ten thousand rupees in favour of the authority. [Rule 6(2)]
According to Rule 6(6), If the authority is satisfied, it may grant a certificate of registration to the applicant to carry on the activities of a registered valuer for the relevant asset class or classes in Form-C.
Conditions of Registration
According to Rule 7, the registration granted under rule 6 shall be subject to the conditions that the valuer shall –
(a) at all times possess the eligibility and qualification and experience criteria;
(b) at all times comply with the provisions of the Act, these rules and the Bye-laws or internal regulations, as the case may be, of the respective registered valuers organisation;
(c) in his capacity as a registered valuer, not conduct the valuation of the assets or class(es) of assets other than for which he/it has been registered by the authority;
(d) take prior permission of the authority for shifting his/ its membership from one registered valuers organisation to another;
(e) take adequate steps for redressal of grievances;
(f) maintain records of each assignment undertaken by him for at least three years from the completion of such assignment;
(g) comply with the Code of Conduct (as per Annexure-I of these rules) of the registered valuers organisation of which he is a member;
(h) in case a partnership entity or company is the registered valuer, allow only the partner or director who is a registered valuer for the asset class(es) that is being valued to sign and act on behalf of it;
(i) in case a partnership entity or company is the registered valuer, it shall disclose to the company concerned, the extent of capital employed or contributed in the partnership entity or the company by the partner or director, as the case may be, who would sign and act in respect of relevant valuation assignment for the company;
(j) in case a partnership entity is the registered valuer, be liable jointly and severally along with the partner who signs and acts in respect of a valuation assignment on behalf of the partnership entity;
(k) in case a company is the registered valuer, be liable along with the director who signs and acts in respect of a valuation assignment on behalf of the company;
(l) in case a partnership entity or company is the registered valuer, immediately inform the authority on the removal of a partner or director, as the case may be, who is a registered valuer along with detailed reasons for such removal; and
(m) comply with such other conditions as may be imposed by the authority.
Thank you for above article
Can we appliy online for registered valuer? please provide website for the same. or address where do we submit the application form?
you can have more information on ibbi.gov.in