The concept of Registered Valuers was brought by section 247 of The ComPANies Act, 2013 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 mentioned “as may be prescribed”. Hence it was implied that Rules specifying Registered valuer’s qualification, experience, manner and pROCess to follow.
As per MCA Notification dated 14/12/2016, the Valuation in case of Merger & Amalgamation (including valuation for Purchase of Minority shareholders) shall be done by Independent Merchant Banker registered with Security Exchange Board of India or Independent Chartered Accountant in practice having minimum experience of 10 Years.
The Ministry of Corporate Affairs (MCA) has notified the provisions governing valuation by registered valuers [section 247 of the ComPANies Act, 2013 (the Act)] and the ComPANies (Registered Valuers and Valuation) Rules, 2017 (the Rules), both to come into effect from 18 October, 2017.
The ComPANies (Registered Valuers and Valuation) Rules, 2017 rule 11 specified as under :
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:
It was 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.
However on 31st March the Valuation exam just commenced, hence there were no Registered Valuers were available. Considering this MCA extended the date to 30th September 2018 by way of issuing notification.
On 30th September the number of Registered Valuers was limited, hence MCA by way of notification dated 25th September 2018 , further extended the date by 4 months more to 31st January 2019.
MCA by way of notification on 23 October, 2017, To administer and perform functions under the said rules, , has specified the Insolvency and Bankruptcy Board of India (IBBI) as the responsible authority. Hence IBBI will be regulator administer and perform the functions of Central Government. Thus IBBI has powers to regulate the valuation domain both under comPANies Act & IBC.
We also would like to bring to your notice circular of IBBI dated 17th October 2018 which mandates as under :
“In view of the above, every valuation required under the Code or any of the regulations made there under is required to be conducted by a ‘registered valuer’, that is, a valuer registered with the IBBI under the ComPANies (Registered Valuers and Valuation) Rules, 2017. It is hereby directed that with effect from 1st February, 2019, no insolvency professional shall appoint a person other than a registered valuer to conduct any valuation under the Code or any of the regulations made there under.
This notification was issued immediately after extension notification on 25th September 2018. IBBI being regulatory body for IBC 2016, has clear cut indicated that valuation under IBC has to be carried out through registered Valuers only post 1st February 2019. The powers of Central Government under ComPANies Act 2013 have been delegated to IBBI by way of notification on 23rd October. Hence it was evident that that the cutoff date for ComPANies Act may not get further extension.
The extension for obtaining Valuation Reports from persons other than Registered Valuers has ended on 31st January 2019 under ComPANies Act 2013 as well as IBC 2016 & allied laws.