There are many instances where valuation of shares required in case of transfer of shares of unlisted and privately held companies. Situation reached to that level even newly incorporated Company with Rs. 1 lakh Capital, if any shareholder want to take exit and have to transfer their irrespective of percentage of stake release, face value, book value of share Company has to get Valuation of Shares done and have to bear the cost of Valuation.
Ministry of corporate affairs with Insolvency and Bankruptcy Board of India came up with
List of Valuation essential under Companies Act 2013 & Insolvency and Bankruptcy code 2016
A list of the provisions of the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016 has been circulated, under which valuations are requisite to be conducted by means of a registered valuer.
The circular is made to all the Registered Valuers; Recognized Registered Valuer Organizations; Registered Insolvency Professionals, and Registered Insolvency Professional Agencies.
The circular states that Rule 10 of the Companies (Registered Valuers and Valuation) Rules, 2017 (Rules) read that along with section 247 of the Companies Act, 2013 (Act) need that a Registered Valuer would conduct valuations which is requisite under the Act.
A Circular dated 17th October, 2018 of IBBI commands that the valuations required under the Code or any of the regulations made there under would be conducted through a Registered Valuer.
A list of the provisions of the Act as well as the Code under which valuations are requisite to be conducted through a Registered Valuer are at Annexures I and II respectively for ready reference of the shareholders. The shareholders are, though, advised towards referring to the pertinent provisions in the Act, the Code and the Rules and Regulations made there under, for the purpose of compliance.
Valuation requisite under the Companies Act, 2013
|Sl. No.||Section / Rules||Particulars|
|1||Section 62(1)(c) of the Companies Act, 2013 along with Rule 13(1) of the Companies (Share Capital and Debentures) Rules, 2014||Further issue of share capital|
|2||Section 177(4)(vi) of the Companies Act, 2013||Terms of reference of Audit Committee|
|3||Section 192(1) and 192(2) of the Companies Act, 2013||Restriction on non-cash transactions which involves directors|
|4||Section 230(2)(c)(v) and Section 230(3) of Companies Act, 2013||Power to compromise or make arrangements with creditors and members|
|5||Section 232 (2)(d) and Section 232 (3)(h)(B) of the Companies Act, 2013||Merger and amalgamation of corporations|
|6||Section 236(2) of the Companies Act, 2013||Purchase of minority shareholding|
|7||Section 247(1) of the Companies Act, 2013||Valuation by means of Registered Valuers|
|8||Section 281(1)(a) of the Companies Act, 2013||Submission of report by Company Liquidator|
|9||Rule 2(c)(ix) of the Companies (Acceptance of Deposit) Rules, 2014||Exclusions from deposits.|
|10||Rule 6(1) of the Companies (Acceptance of Deposit) Rules, 2014||Creation of security|
|11||Rule 8(6), (7), (9) and (12) of the Companies (Share Capital and Debentures) Rules, 2014||Issue of sweat equity shares|
|12||Rule 16(1)(c) of the Companies (Share Capital and Debentures) Rules, 2014||Provision of money by corporation for purchase of its own shares by staffs or by trustees, for the benefit of staffs|
|13||Rule 12(5) of the Companies (Prospectus and Allotment of Securities) Rules, 2014||Return of allotment|
Provisions as per the Insolvency and Bankruptcy Code, 2016 and the Regulations
|Sl. No.||Section/Regulation/ Rules||Particulars|
|1||Section 59(3)(b)(ii) of the Insolvency and Bankruptcy Code, 2016||Voluntary liquidation of corporate persons|
|2||Section 46(2) of the Insolvency and Bankruptcy Code, 2016||Relevant period for avoidable transactions|
|3||Regulation 27 along with regulation 35 of the IBBI(Insolvency Resolution Process for Corporate Persons) Regulations, 2016||1) Appointment of registered valuers;
2) Fair value and liquidation value
|4||Regulation 35 of the IBBI(Liquidation Process) Regulations, 2016||Valuation of assets intended towards being sold|
|5||Regulation 3(1)(b)(ii) of the IBBI (Voluntary Liquidation Process) Regulations, 2017||Initiation of liquidation|
|6||Regulation 26 of the IBBI(Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017||Appointment of registered valuer|
|7||Regulation 34 of the IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017||Fair value and liquidation value|