Ms. Dipti Mehta

Company Secretary

29th

May, 2018

Mehta & Mehta Legal and Advisory Services Private Limited

Address: 201-206, Shiv Smriti Chambers, 2nd Floor, Dr. Annie Besant

Road, Above Corporation Bank, Worli, Mumbai – 400018

CIN: U74140MH2006PTC163236

Phone: +91-22-6611-9696

Email: info@mehta-mehta.com

Website: www.mehta-mehtaadvisory.com

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Article on

Laws and Regulations

relevant to Financial

Asset Valuation

What is an 'Asset Valuation'?

Asset valuation is the process of assessing the value of a company, real property or any other

item of worth, in particular assets that produce cash flows. Asset valuation is commonly

performed prior to the purchase or sale of an asset or prior to purchasing insurance for an

asset. Asset valuation can be based on cash flows, comparable valuation metrics or transaction

value.

A large portion of financial theory is centered around asset valuation. Assets can include stocks,

bonds, buildings, equipment and intangible assets such as brands, goodwill and labor. As a

result, asset valuation often consists of both subjective and objective measurements. For

example, there is no number on the financial statements that tells investors how much the

company's brand is worth; brand is an intangible asset and the valuation is subjective. On the

other hand, net profit is an objective measurement based on the company's income and

expense figures. If a company is looking to acquire another company's assets, it can look at the

book value of assets, the market value of assets, and the transaction or replacement value.

https://www.investopedia.com/terms/v/valuation.asphttps://www.investopedia.com/video/play/financial-statements/

Relative and Transaction Asset Valuation

The most liquid assets can be traded on the market and therefore have a market value. Assets

that have a market value are valued based on multiples of that value. For instance, stocks are

often valued based on a multiple of price to earnings, price-to-book value or price-to-cash

flows. These are relative market valuations. Transaction or replacement cost analysis seeks to

find deals involving similar assets. This method is good for illiquid assets or assets with no

market value. For example, home values go through cycles of demand. The best way to

determine a value for your home is to compare it against similar home sales in the same area.

Aspects of Registered Valuers

With above background, the Companies Act, 2013 (Act) had brought the concept

of Registered Valuers to regulate the practice of Valuation in India and to

standardize the valuation in line with International standards. However the

valuer ’s qualification, experience, manner and process was left to be decided by the Rules.

After about 4 years, the Ministry of Corporate Affairs (MCA) has now issued the

Companies (Registered Valuers and Valuation) Rules, 2017 (Rules) on 18th

October, 2017. Simultaneously, section 247 of the Act has now come into force

w.e.f. 18th

October 2017.

These rules contain various aspects pertaining to Registered Valuers including:

Who can become Valuer (including Qualification, experience and clearance of Valuation examination) for each Asset Class and the process involved;

Eligibility and Role of Registered Valuers Organisation (RVO) for conducting educational courses, granting membership, conducting training, laying code of

conduct, monitoring the functioning of valuers and addressing grievances

including conducting disciplinary proceedings against valuers who are its

members;

The Valuation Standards required to be adhered to while p erforming and reporting;

Contents of the Valuation Report including permissible caveats and limitations;

Professional competence and Due Care and Independence of Valuer;

Maintenance of record of each assignment for minimum 3 years and

Regulation of the profession including Model code of conduct for Registered Valuers.

However, the basic understanding of Valuation says that though one can make

the valuation process more codified and scientific however Valuation will

always involve judgement based on experience of the valuers and would still be

based upon the assumptions and limiting conditions based on the data

available on a valuation date . Accordingly, what the Registered Valuers law is

now telling is essentially to learn, assess, analyse, document and disclose with

transparency.

SECTION 247 OF THE ACT: REGISTERED VALUERS

Section 247 of the Act states that a Registered Valuer would carry out valuation

in respect of any property, stocks, shares, debentures, securities or goodwill or

any other assets or net worth of a company or its liabilities and that the valuer

shall have such qualifications and experience and * being a member of an

organisation recognised, on such terms and conditions as may be prescribed.

The Registered Valuer shall be appointed by the audit committee or in its

absence by the Board of Directors of that company.

Regarding the functioning and duties of th e Registered Valuer, it is stated that

the Registered valuer shall -

(a)make an impartial, true and fair valuation of any assets which may be required

to be valued;

(b)exercise due diligence while performing the functions as valuer;

(c)make the valuation in accordance with such rules as may be prescribed; and

(d)not undertake valuation of any assets in which he has a direct or indirect

interest or becomes so interested at any time during or after the valuation of

assets.

There is a specific sub-section dealing with the punishment and liability of the

valuers which states that upon contravention of any provisions of Registered

Valuer provisions-

The Registered Valuer shall be punishable with fine which shall not be less than

twenty-five thousand rupees but which may extend to one lakh rupees:

However, 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.

Where a valuer has been convicted under these provisions, he shall be liable to -

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

(ii) 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.

Thus, merely by reading of Section 247 of the Act, dealing with Registered

Valuers, it is clear that intention of the government has been to regulate the

practice of valuation as a Professional practice and all applicable restrictions

including that of eligibility, appointment, independence, exercising due care and

levy of penalty including payment of damages and also imprisonment i n case of

intention to defraud has been provided for . The Rules have now elaborated each

of the above points of the Act in a detailed manner.

*as clarified vide MCA notification dated 23rd October 2017

SPECIFIC PROVISIONS UNDER THE COMPANIES ACT, 2013 WHICH REQUIRES

VALUATION REPORT FROM A REGISTERED VALUER

Sl.

no. Section Particulars

1 62(1)C Valuation report for Further Issue of Shares

2 192(2) Valuation of Assets Involved in Arrangement of Non cash

transactions involving Directors

3 230(2)(c)(v) Valuation of shares, property and assets of the Company under

a scheme of Corporate Debt Restructuring

4 230(3) Valuation report along with Notice of creditors/shareholders

meeting –Under scheme of compromise/Arrangement

5 232(2(d) The report of the expert with regard to valuation, if any, would

be circulated for meeting of creditors/Members

6 232(3)(h)

The Valuation report to be made by the tribunal for exit

opportunity to the shareholders of transferor Company – Under the scheme of Compromise/Arrangement in case the Transferor

company is Listed Company and the Transferee -company is an

unlisted Company

7 236(2) Valuation of equity shares held by the Minority Share Holders

8 281(1) Valuing assets for submission of report by liquidator

REGISTERED VALUER UNDER THE INSOLVENCY CODE INSOLVENCY AND

BANKRUPTCY BOARD OF INDIA REGULATIONS, 2016 WHICH REQUIRES

VALUATION REPORT FROM A REGISTERED VALUER

Under Insolvency Code and Insolvency and Bankruptcy Board of India Regulations,

2016 - Registered Valuer means a person registered as such in accordance with

the Companies Act, 2013 and rules made thereunder .

REGISTERED VALUER UNDER THE SEBI (REIT AND INVIT) REGULATIONS, 2016

WHICH REQUIRES VALUATION REPORT FROM A REGISTERED VALUER

Under SEBI (REIT and InvIT) Regulations, 2016 valuer means any person who is a

"registered valuer" under section 247 of the Companies Act, 2013 and who has

been appointed by the manager to undertake valuation of the REIT assets .

COMPANIES (REGISTERED VALUERS AND VALUATION) RULES, 2017 (RULES)

Major Definitions-

1. *authority means an authority specified by the Central Government under

section 458 of the Companies Act, 2013 to perform the functions under these

rules;

2. asset class means a distinct group of assets, such as land and building,

machinery and equipment, displaying similar characteristics, that can be

classified and requires separate set of valuers for valuation;

3. certificate of recognition means the certificate of recognition granted to a

registered valuers organisation under sub-rule (5) of rule 13 and the term

recognition shall be construed accordingly;

4. certificate of registration means the certificate of registration granted to a

valuer under sub-rule (6) of rule 6 and the term registration shall be

construed accordingly;

5. registered valuers organisation means a registered valuers organisation

(RVO) recognised under sub-rule (5) of rule 13;

6. valuation standards means the standards on valuation referred to in rule

18; and

7. valuer means a person registered with the authority in accordance with

these rules and the term registered valuer shall be construed accordingly.

*Vide MCA notification dated 23rd October 2017, Central Government has

delegated its powers for Registered Valuers to the Insolvency and Bankruptcy

Board of India (IBBI) .

RULE 3 : ELIGIBILITY FOR REGISTERED VALUERS

A person shall be eligible to be a Registered Valuer if he -

a. is a valuer member of a RVO

b. possesses the qualification and experience specified in rule 4

c. has passed the Valuation Examination under rule 5 within three years

preceding the date of making an application for registration under rule 6:

d. is a person resident in India

e. is a fit and proper person

For determining whether an individual is a fit and proper person, the

authority may take into consideration any criteria including integrity,

reputation and character, absence of convictions and restraint orders and

competence and financial solvency.

For Registration as Valuer of an asset class, a person need to possess

qualifications and experience and also has to pass the valuation examination

No partnership entity or company shall be eligible to be a registered valuer if -

a. it has been set up for objects other than for rendering professional or

financial services, including valuation services and that in the case of a

company, it 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. three or all the partners or directors, whichever is lower, of the partnership

entity or company, as the case may be, are not registered value rs; or

e. none 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.

For valuing each class of assets (Land and Building, Plant and Machinery and

Securities and Financial Assets), now there is a need to appoint Valuer Registered

under each class of Assets.

In case a firm/company intends to be Registered as Valuer, its object must be for

rendering professional or financial services including valuation services.

Further, in case a firm/company intends to be Registered as Valuer, and has more

than 2 Partners/Directors, minimum 3 of them need to be Registered as Valuers.

This may create practical difficulties for firms/companies doing valuation practice

in a firm/company along with other professional services and may lead to carve

out of valuation services in a separate entity.

Also, in case a company intends to be Registered as Valuer, it should not be a

subsidiary, joint venture or associate of another c ompany or body corporate.

RULE 4 : QUALIFICATION AND EXPERIENCE

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).

Hence, this clause the specified discipline shall mean the specific discipline

which is relevant for valuation of an asset class for which the registration as a

valuer or recognition as a registered valuers organisation is sought under these

rules.

The qualifying education, experience and examination or training for various

asset classes, is given in an indicative manner in Annexure – IV of these rules.

Summary of Annexure – IV

Asset

Classes Qualification Experience

Valuation

Examination

Land and

Building

Graduate in Civil Engineering,

Architecture or Town

Planning of a recognised

university

5 year of experience

in discipline after

completing

graduation

As per Rule 5

Post Graduate in Civil

Engineering, Architecture or

Town Planning of a recognised

university

3 year of experience

in discipline after

completing post-

graduation

As per Rule 5

Graduate in a discipline

specified by the Authority for a

RVO in its conditions of

recognition and Post Graduate

in Valuation of land and building

or real estate from a recognised

university

5 year of experience

in discipline after

completing post-

graduation

As per Rule 5

Plant and

Machinery

Graduate in Mechanical or

Electrical Engineering of a

recognised university

5 year of experience

in discipline after

completing

graduation

As per Rule 5

Post Graduate in Mechanical or

Electrical Engineering of a

recognised university

3 years of

experience in

discipline after

completing post-

graduation

As per Rule 5

Graduate in Valuation of

machinery and plant from

recognised university and Post

Graduate in Valuation of

machinery and plant from

recognised university

3 year of experience

in discipline after

completing post-

graduation

As per Rule 5

Securities

or

Financial

Assets

Graduate in any stream and

Member of Professional

Institute (CA/CS/CMA) or

MBA/PGDBM specialisation in

finance or Post graduate degree

in Finance

3 year of experience

in discipline after

completing

graduation

As per Rule 5

Any other graduate or post

graduate level qualification as

may be specified by Authority

5 year and 3 year of

experience in case of

graduate level

degree and post

graduate level

degree respectively

As per Rule 5

As per the qualification criteria, the Graduates in the stream of engineering are

permitted to be Registered as Valuers for Land and Building and Plant and

Machinery.

However for valuation of Security and Financial Assets, members of Professional

Institute (CA/CS/CMA) who are also Graduates in any stream are eligible.

Regarding a case of members of Professional Institute who are not Graduates, the

MCA need to clarify their eligibility to be Registered Valuers. One view is that

considering them at least equivalent to Graduates, they may be specified by the

Authority under Rule 4(b).

RULE 5 : VALUATION EXAMINATION

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 as specified in rule 4, 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:

Provided that 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:

Provided also that the authority may recognise an examination conducted as part

of a master s or post graduate degree course conducted by a University which is

equivalent to the valuation examination.

It is mandatory for all eligible persons to pass the Valuation examination for

being Registered as a Valuer under these rules.

VALUATION EXAMINATION-ASSET CLASS- LAND &

BUILDING W.E.F. 31ST MARCH, 2018

VALUATION EXAMINATION-ASSET CLASS- PLANT &

MACHINERY W.E.F. 31ST MARCH, 2018

VALUATION EXAMINATION- ASSET CLASS- SECURITIES

OR FINANCIAL ASSETS W.E.F. 31ST MARCH, 2018

RULE 6 : APPLICATION FOR CERTIFICATE OF REGISTRATION

(1) An individual eligible for registration as a registered valuer under rule 3 may

make an application to the authority in Form - A of Annexure - II along with a

non-refundable application fee of five thousand rupees in favour of the authority.

(2) 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.

If the authority is satisfied, after such scrutiny, inspection or inquiry as it d eems

necessary, that the applicant is eligible under these rules, 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 of the

Annexure-II within sixty days of receipt of the application .

RULE 7 : CONDITIONS OF REGISTRATION

The valuer shall –

a. At all times possess the eligibility qualification and experience

b. At all times comply with provisions of the Act, these Rules and internal

regulations of the respective RVO

c. Not conduct valuation of assets other than for which he/it has been

registered

d. Maintain records of all assignments undertaken by him for at least 3 years

from the completion of such assignments

e. Comply with code of conduct of the RVO

f. Allow only the partner/Director who is a Registered valuer for the asset class

that is being valued to sign and act on behalf of it

g. in case a partnership entity or company is the registered valuer, it shall

disclose to the company concerned, the extent of c apital 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;

h. in case a partnership entity/company is the register ed valuer, be liable jointly

and severally along with the partner/director who signs and acts in respect of

a valuation assignment on behalf of the partnership entity/company;

The Valuer has to comply with the Act, Rules and also with the bye laws and code

of conduct of the RVO

Maintain records of all Valuation assignments for 3 years

The Valuation report can be signed only by the Partner/Director who is a

Registered Valuer for the class of asset being valued .

RULE 8 : CONDUCT OF VALUATION

The registered valuer shall, while conducting a valuation, comply with the

valuation standards as notified or modified under rule 18:

Provided that until the valuation standards are notified or modified by the

Central Government, a valuer shall make valuations as per -

(a) internationally accepted valuation standards;

(b) valuation standards adopted by any registered valuers organisation.

The registered valuer may obtain inputs for his valuation report or get a separate

valuation for an asset class conducted from another registered valuer, in which

case he shall fully disclose the details of the inputs and the particulars etc. of the

other registered valuer in his report and the liabilities against the resultant

valuation, irrespective of the nature of inputs or valuation by the other

registered valuer, shall remain of the first mentioned registered valuer.

The valuation shall now be conducted based on the Valuation Standards. Unless

these standards are made, the valuation shall be done as per internationally

accepted valuation standards. There are International Valuation Standards, 2017

issued by the International Valuation Standards Council (IVSC) which may be

relied upon. Further the existing regulatory provisions prescribed by other

regulators including Income Tax, RBI, SEBI and the Valuation reports and Fairness

Opinions on Scheme of Arrangement (available in public domain) may be

reviewed. In case a valuer has taken registration for one of the class of assets,

but the assignment requires valuation of other class of ass ets as well, he/it may

get valuation of other class of assets from another Registered valuer but it shall

be fully disclosed and the liabilities, if any against the resultant valuation shall

remain with the first mentioned registered valuer. Accordingly ou tsourcing of

Valuation assignments would be done carefully after proper understanding of

credentials of the other valuer.

CONTENTS OF VALUATION REPORT

The valuer shall in his report state the following :

Background information of the asset being valued

Purpose of Valuation and Appointing authority

Identity of Valuer and any other experts involved in valuation

Disclosure of Valuer interest/conflict, if any

Date of appointment, valuation date and date of report

inspections and/or investigations undertaken;

Nature and sources of the information used or relied upon;

Procedures adopted in carrying out the valuation and the valuation standards followed

Restrictions on use of the report, if any;

Major factors that were taken into account during the valuation

Conclusion and

Caveats, Limitations and Disclaimers to the extent they explain or elucidate the limitations faced by valuer, which shall not be for the purpose of limiting

his responsibility for the valuation report. 0

The model code of conduct further states that the valuer shall exercise due

diligence and ensure proper care is taken while exercising professional

judgement.

Now Valuers cannot disclaim their liability for their expertise by giving caveats in

their report. They will be held accountable f or the assumptions and decisions

pertaining to the Valuation exercise. However it has been clarified that the

assumptions are based by the statement of facts provided by the company or

information available in public domain and not generated by the valuer.

It is further stated in the model code that the valuer shall maintain written

records for any decision taken, reasons for it along with the information and

evidence in its support.

Accordingly all valuations would now have to follow a detailed process and thus

serious professionals with inclination in valuation and finance should enter this

profession.

RULE 10 : FUNCTIONS OF A VALUER

A valuer shall conduct valuation required under the Act as per these rules and he

may conduct valuation as per these rules if required under any other law or by

any other regulatory authority.

RULE 11 : TRANSITIONAL ARRANGEMENT

Any person who may be rendering valuation services under the Act, on the date

of commencement of these rules, may continue to render valuation services

without a certificate of registration under these rules upto 31st

March, 2018:

Provided that if a company has appointed any valuer before such date and the

valuation or any part of it has not been completed before 31st

March, 2018, the

valuer shall complete such valuation or such part within three months thereafter.

It is hereby clarified that conduct of valuation by any person under any law other

than the Act, or these rules shall not be effected by virtue of coming into effect

of these rules unless the relevant other laws or other regulatory bodies require

valuation by such person in accordance with these rules in which case these rules

shall apply for such valuation also from the date specified under the laws or by

the regulatory bodies.

It is clarified that the Registered Valuer provisions only cover the valuation

required under the Act. However , other regulatory authorities may direct for

valuation as per Registered Valuer rules under their statutes/regulations. Till that

time, the valuation as per other Law/Regulations like Income Tax, RBI, SEBI etc

shall take place as it is and Registered Valuer provisions would not automatically

become applicable on them.

RULE 12 : ELIGIBILITY FOR REGISTERED VALUERS ORGANISATIONS (RVO)

(1) An organisation that meets requirements under sub-rule (2) may be

recognised as a registered valuers organisation for valuation of a specific asset

class or asset classes if ─

(i) it has been registered under section 25 of the Companies Act, 1956 (1 of 1956)

or section 8 of the Companies Act, 2013 (18 of 2013) with the sole object of

dealing with matters relating to regulation of valuers of an asset class or asset

classes and has in its bye laws the requirements specified in Annexure -III;

(ii) a professional institute established by an Act of Parliament enacted for the

purpose of regulation of a profession;

(iii) the organisations may also be recognised as a registered valuers organisation

for valuation of a specific asset class or asset classes even if they are: (a) an

organisation registered as a society under the Societies Registration Act, 1860 or

any relevant state law, or; (b) an organisation set up as a trust governed by the

Indian Trust Act, 1882 provided that they convert into a company under section 8

of the companies act, 2013 and include the prescribed requirements of the model

bye laws within one year from the date of commencement of these rules.

The RVO shall be recognised if it conducts educational courses in valuation and

which includes practical training, grants membership or certificate of practice in

respect of valuation of asset class, conducts training before certificate of practice

is issued, lays down and enforces a code of conduct, provides continuing

education, monitors and reviews the functioning incl uding quality of service, has

a mechanism to addressing grievances and conducting disciplinary proceedings

against valuers who are its members.

For Securities and Financial Assets, all the three Professional institutes (CA/CS

and CMA) are expected to get registered as a RVO.

However the institutes would have to conduct educational courses in valuation

including practical training, training, CPE and monitoring of quality of valuation

services.

As of now, CA, CS and CMA Institutes have a Certificate course on Valuation and

certificate is given after attending its classes and clearing a Valuation exam and

submission of project report. However ICSI and ICWAI would have to build its

capacity further for their members to get engaged in niche Valuation profession .

Similar registrations would be taken by the Institution of Valuers, Institution of

Engineers etc. for covering the valuation of Plant and Machinery and Land and

Building.

RULE 13 : APPLICATION FOR RECOGNITION AS RVO

An eligible organisation which meets the conditions specified in rule 12 may

make an application for recognition as a registered valuers organisation for asset

class or classes to the authority in Form-D of the Annexure-II alongwith a non-

refundable application fee of rupees one lakh in favour of the authority.

If the authority is satisfied, after such scrutiny, inspection or inquiry as it deems

necessary that the applicant is eligible under these rules, it may grant a

certificate of recognition as a registered valuers organisation in Fo rm-E of

Annexure – II.

RULE 14 : CONDITIONS OF RECOGNITION AS RVO

The recognition granted under rule 13 shall be subject to the conditions that the

registered valuers organisation shall -

(a) at all times continue to satisfy the eligibility requirements s pecified under

rule 12;

(b) maintain a register of members who are registered valuers, which shall be

publicly available;

(c) admits only individuals who possess the educational qualifications and

experience requirements, in accordance with rule 4 and as s pecified in its

recognition certificate, as members;

(d) make such reports to the authority as may be required by it;

(e) comply with any directions, including with regard to course to be conducted

by valuation organisation, issued by the authority;

(f) be converted or registered as company under section 8 of the Act, with

governance structure and bye laws, within a period of one year from the date of

commencement of these rules if it is an organisation referred to in proviso to

sub-rule (1) of rule 12;

(g) shall have the governance structure and incorporate in its bye laws the

requirements specified in Annexure-III within one year of commencement of

these rules if it is an organisation referred to in clause (i) of sub -rule (1) of rule

12 and existing on the date of commencement of these rules;

(h) display on its website, the status and specified details of every registered

valuer being its valuer members including action under rule 17 being taken

against him; and

(i) comply with such other conditions as may be specified by authority.

RULE 15 : CANCELLATION OR SUSPENSION OF CERTIFICATE OF REGISTRATION OR

RECOGNITION

The authority may cancel or suspend the registration of a valuer or recognition of

a registered valuers organisation for violation of the provisi ons of the Act, any

other law allowing him to perform valuation, these rules or any condition of

registration or recognition, as the case may be in the manner specified in rule 17.

RULE 16 : COMPLAINT AGAINST A REGISTERED VALUER OR REGISTERED VALUERS

ORGANISATION

A complaint may be filed against a registered valuer or registered valuers

organisation before the authority in person or by post or courier along with a

non-refundable fees of rupees one thousand in favour of the authority and the

authority shall examine the complaint and take such necessary action as it deems

fit: Provided that in case of a complaint against a registered valuer, who is a

partner of a partnership entity or director of a company, the authority may refer

the complaint to the relevant registered valuers organisation and such

organisation shall handle the complaint in accordance with its bye laws.

RULE 18 : VALUATION STANDARDS

The Central Government shall notify and may modify (from time to time) the

valuation standards on the recommendations of the Committee set up under rule

19.

RULE 19 : COMMITTEE TO ADVISE ON VALUATION MATTERS

The Central Government may constitute a Committee to be known as Committee

to advise on valuation matters to make recommendations on formulation and

laying down of valuation standards and policies for compliance by companies and

registered valuers.

RULE 20 : PUNISHMENT FOR CONTRAVENTION

Without prejudice to any other liabilities where a person contravenes any of the

provision of these rules he shal l be punishable in accordance with sub -section (3)

of section 469 of the Act.

Section 469 (3) of the Act provides for punishment with fine which may extend to

five thousand rupees and where the contravention is a continuing one, with a

further fine which may extend to five hundred rupees for every day after the first

during which such contravention continues.

RULE 21 : PUNISHMENT FOR FALSE STATEMENT

If in any report, certificate or other document required by, or for, the purposes

of any of the provisions of the Act or the rules made thereunder or these rules,

any person makes a statement,—

(a) which is false in any material particulars, knowing it to be false; or

(b) which omits any material fact, knowing it to be material, he shall be liable

under section 448 of the Act.

Section 448 of Act states that if in any certificate or report is issued under the

Act which is either false in material particulars or omits any material fact,

knowing it to be material, it shall be treated as Fraud and be punishable with-

Imprisonment for a term which shall not be less than six months but which may

extend to ten years and shall also be liable to fine which shall not be less than

the amount involved in the fraud, but which may extend to three times the

amount involved in the fraud:

Provided that where the fraud in question involves public interest, the term of

imprisonment shall not be less than three years.

For the purposes of this section-

fraud in relation to affairs of a company or any body corporate, includes any

act, omission, concealment of any fact or abuse of position committed by any

person or any other person with the connivance in any manner, with intent to

deceive, to gain undue advantage from, or to injure the interests of, the comp any

or its shareholders or its creditors or any other person, whether or not there is

any wrongful gain or wrongful loss;

ANNEXURE I : MODEL CODE OF CONDUCT FOR REGISTERED VALUERS

Integrity and Fairness

1. A valuer shall, in the conduct of his/its business, follow high standards of

integrity and fairness in all his/its dealings with his/its clients and other

valuers.

2. A valuer shall maintain integrity by being honest, straightforward, and

forthright in all professional relationships.

3. A valuer shall endeavour to ensure that he/it provides true and adequate

information and shall not misrepresent any facts or situations.

4. A valuer shall refrain from being involved in any action that would bring

disrepute to the profession.

5. A valuer shall keep public interest foremost while delivering his services.

Professional Competence and Due Care

6. A valuer shall render at all times high standards of service, exercise due

diligence, ensure proper care and exercise independent professional

judgment.

7. A valuer shall carry out professional services in accordance with the relevant

technical and professional standards that may be specified from time to time

8. A valuer shall continuously maintain professional knowledge and skill to

provide competent professional service bas ed on up-to-date developments in

practice, prevailing regulations/guidelines and techniques.

9. In the preparation of a valuation report, the valuer shall not disclaim liability

for his/its expertise or deny his/its duty of care, except to the extent that the

assumptions are based on statements of fact provided by the company or its

auditors or consultants or information available in public domain and not

generated by the valuer.

10. A valuer shall not carry out any instruction of the client insofar as they are

incompatible with the requirements of integrity, objectivity and

independence.

11. A valuer shall clearly state to his client the services that he would be

competent to provide and the services for which he would be relying on other

valuers or professionals or for which the client can have a separate

arrangement with other valuers.

Independence and Disclosure of Interest

12. A valuer shall act with objectivity in his/its professional dealings by ensuring

that his/its decisions are made without the presence of any b ias, conflict of

interest, coercion, or undue influence of any party, whether directly

connected to the valuation assignment or not.

13. A valuer shall not take up an assignment if he/it or any of his/its relatives or

associates is not independent in terms of association to the company.

14. A valuer shall maintain complete independence in his/its professional

relationships and shall conduct the valuation independent of external

influences.

15. A valuer shall wherever necessary disclose to the clients, possible sources of

conflicts of duties and interests, while providing unbiased services.

16. A valuer shall not deal in securities of any subject company after any time

when he/it first becomes aware of the possibility of his/its association with

the valuation, and in accordance with the Securities and Exchange Board of

India (Prohibition of Insider Trading) Regulations, 2015 or till the time the

valuation report becomes public, whichever is earlier.

17. A valuer shall not indulge in mandate snatching or offering convenience

valuations in order to cater to a company or client s needs.

18. As an independent valuer, the valuer shall not charge success fee.

19. In any fairness opinion or independent expert opinion submitted by a valuer,

if there has been a prior engagement in an unconnect ed transaction, the

valuer shall declare the association with the company during the last five

years.

Confidentiality

20. A valuer shall not use or divulge to other clients or any other party any

confidential information about the subject company, which has come to

his/its knowledge without proper and specific authority or unless there is a

legal or professional right or duty to disclose.

Information Management

21. A valuer shall ensure that he/ it maintains written contemporaneous records

for any decision taken, the reasons for taking the decision, and the

information and evidence in support of such decision. This shall be

maintained so as to sufficiently enable a reasonable person to take a view on

the appropriateness of his/its decisions and actions.

22. A valuer shall appear, co-operate and be available for inspections and

investigations carried out by the authority, any person authorised by the

authority, the registered valuers organisation with which he/it is registered or

any other statutory regulatory body.

23. A valuer shall provide all information and records as may be required by the

authority, the Tribunal, Appellate Tribunal, the registered valuers

organisation with which he/it is registered, or any other statutory regulatory

body.

24. A valuer while respecting the confidentiality of information acquired during

the course of performing professional services, shall maintain proper working

papers for a period of three years or such longer period as required in its

contract for a specific valuation, for production b efore a regulatory authority

or for a peer review. In the event of a pending case before the Tribunal or

Appellate Tribunal, the record shall be maintained till the disposal of the

case. Gifts and hospitality.

25. A valuer or his/its relative shall not accept gifts or hospitality which

u der i es or affects his i depe de ce as a valuer. Expla atio .─ For the purposes of this code the term relative shall have the same meaning as

defined in clause (77) of Section 2 of the Companies Act, 2013.

26. A valuer shall not offer gifts or hospitality or a financial or any other

advantage to a public servant or any other person with a view to obtain or

retain work for himself/ itself, or to obtain or retain an advantage in the

conduct of profession for himself/ itself. Remune ration and Costs.

27. A valuer shall provide services for remuneration which is charged in a

transparent manner, is a reasonable reflection of the work necessarily and

properly undertaken, and is not inconsistent with the applicable rules.

28. A valuer shall not accept any fees or charges other than those which are

disclosed in a written contract with the person to whom he would be

rendering service. Occupation, employability and restrictions.

29. A valuer shall refrain from accepting too many assignments, if he/it is unlikely

to be able to devote adequate time to each of his/ its assignments.

30. A valuer shall not conduct business which in the opinion of the authority or

the registered valuer organisation discredits the profession.

International Valuation Standards

International Valuation Standards Overview (in addition to Business Practices and Ethics)

satisfies the Appraisal Institute Standards of Professional Appraisal Practice requirement for

international Candidates for Designation. This program is also one of three courses that form

the core requirements to complete the Appraisal Institute Professional Development Program in

International Valuation of Fixed Assets. The other two courses in the program are Valuation in

Challenging Markets and International Financial Reporting Standards for the Real Property

Appraiser.

This course provides a general survey of the standards within the International Valuation

Standards 2017 (IVS 2017). A working knowledge of this document will foster both ethical

behavior and competent practice. By becoming familiar with these standards, valuation

professionals who perform international assignments will gain a high level of public trust and

confidence, which benefits the real estate valuation profession in the US and overseas.

The International Valuation Standards give clients, other intended users, and the public a

reason to place their trust in services performed by professional valuation experts. In other

words, they can have greater confidence in valuation services because they know that valuation

experts completing assignments under the International Valuation Standards are required to

follow standards of ethical practice.

IVS 2017, which is the 10th edition, was adopted in December 2016 with an effective date of

July 1, 2017.

Upon completion of the course, participants should be able to:

Recognize how IVS provides a common basis for evaluating whether or not a valuer is doing credible work in a given assignment.

Recognize that IVS is a reference source for those outside the valuation profession and especially those who have little knowledge of valuation practice.

What is an 'Asset Valuation'?Relative and Transaction Asset ValuationVALUATION EXAMINATION-ASSET CLASS- LAND & BUILDING W.E.F. 31ST MARCH, 2018VALUATION EXAMINATION-ASSET CLASS- PLANT & MACHINERY W.E.F. 31ST MARCH, 2018VALUATION EXAMINATION- ASSET CLASS- SECURITIES OR FINANCIAL ASSETS W.E.F. 31ST MARCH, 2018