Financial Daily from THE HINDU group of publications
Thursday, Apr 10, 2003
Regulatory Bodies & Rulings
Corporate - Fixed Deposits
Norms for corporate assets, shares DCA expert group outlines model code for valuers
NEW DELHI, April 9
AN expert group set up by the Department of Company Affairs (DCA) has made a case for bringing in all listed companies under a new set of uniform "valuation principles on shares" that may be prescribed by the Government.
As valuation of shares and computation of exchange ratio are key issues in any scheme or amalgamation or merger of companies, the DCA had set up an expert group on `Valuation principles for corporate assets and shares and other related matters'.
The Group, which submitted its report today, also outlined a model code of conduct for valuers.
According to the committee, the valuation norms should also be applicable to all unlisted public companies accepting public deposits with a minimum net worth of Rs 25 crore or minimum turnover of Rs 150 crore.
Further, the committee has also specified the transactions for which independent valuation by the registered valuer would be mandatory.
Except for scheme of compromise and arrangement of a wholly-owned subsidiary of a company with itself and vice versa, and compromise with creditors not amounting to either a business combination or a spin-off, all schemes of compromise and arrangement under Section 391 to 394 of the Companies Act would require a mandatory valuation, it said.
"The DCA after examining the report will incorporate the same by amending the Companies Act," official sources said.
Describing the qualifications, registration and the model code of conduct for valuers, the group said that, "experienced valuers may be registered in their individual capacity as `valuers in practice', provided they meet certain minimum qualification and experience requirements."
The DCA will initially be the Regulator and Disciplinary Authority over the registered valuers, whether they are valuers in practice or valuers who have qualified, it said. The committee also prescribes for peer review.
The DCA shall maintain a panel of registered valuers who are undertaking or have undertaken mandatory valuations to conduct a peer review and form the Peer Review Committee.
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