Valuation

Requirements

The Companies Act, 2013

Valuation by a Registered Valuer will be required in following situations:

Sections as per
Companies Act 2013

Section 62 (1) (c)*

Section 192 (2)*

Section 230 (2) & (3)

and Section 232

Valuation Requirement/
Purpose

Details

Issue of new shares

If any company proposes to issue new shares (except

a rights issue to existing shareholders or to employees
under employees stock options), the price of such
shares should be determined by the valuation report of
a Registered Valuer.

Non cash transaction with directors

In case of sale or purchase of any asset involving a

company and the directors of the company (or its
holding, subsidiary or associate company) or a person
connected with the Director for consideration other
than cash, the value of the assets has to be calculated
by a Registered Valuer.

Compromises, Arrangements and

Amalgamations

I n case of a compromise or arrangement between

members (such as in mergers or amalgamations) or
with creditors (such as in corporate debt restructuring),
a valuation report in respect of shares, property or
assets, tangible and intangible, movable and immovable
of the company, or a swap ratio report by a Registered
Valuer is required.
In case of mergers, the directors are also required to
circulate a report to members specifying, inter alia, any
special valuation difficulties.

Section 236

Purchase of minority share holding

Section 281 (1) (a) and

Section 305 (2) (d)

Winding up of a company

*Sections that have been notified as on April 2014

In case an acquirer or person acting in concert with the

acquirer acquire 90% or more of the equity capital in a
company, they can offer to the minority shareholder
(or the minority shareholder can offer to the acquirer)
to acquire the minority shareholding at a valuation
determined by the Registered Valuer.
A valuation of assets of the company prepared by the
Registered Valuer is required in case of winding up,
voluntarily or otherwise.

Registered Valuers
Who is a Registered Valuer
Previously, there was no concept of Registered Valuer under the Companies Act. Only the Income Tax Act and Wealth Tax
Act required registration of valuers for valuation of various assets.
Under the Companies Act 2013, the Central Government (or any authority, institution or agency notified by it) will maintain
a register to be called as Register of Valuers.
The following persons will be eligible to apply for being registered as a valuer.
For Financial Valuation
Chartered accountant, company secretary, cost
accountant, retired member of Indian Corporate Law
Service or any person holding equivalent Indian or foreign
qualification as the Ministry of Corporate Affairs may
recognize; and a Merchant Banker employing persons with
above qualifications.

For Technical Valuation

Members of Institution of Engineers (India), Institute of
Architects etc.

Above identified professionals to be in whole time practice, implying being engaged in valuation practice for atleast 5 years,
either individually or in partnership or in limited liability partnership or being a part of merchant banker.
Who will appoint Registered Valuers
Registered Valuers will be appointed by the audit committee, or in its absence, by the Board of Directors of the company

Relevant experience

EY has undertaken more than 1000 valuation engagements in

India in the last 5 years.

EY is the valuer of choice for undertaking valuations for

transactions, mergers, related party transactions and similar
requirements.

How can
EY help
One stop shop

Requisite Skills

EY Merchant Banking Services

Pvt. Ltd. is a Category 1 Merchant Banker.

60 member strong valuation team in India,

supported by EYs global valuation practice.

Team comprises chartered accountants,

cost accountants, architects and engineers
who can assist in nancial or technical
valuation.

Cumulative team experience of more than

200 man years. .

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