Valuations As IBBI Registered

Valuations As IBBI Registered Valuers Under Companies Act, 2013, Insolvency & Bankruptcy

Corporate Insolvency refers to a situation wherein a company isn’t able to meet it’s outstanding operational, financial, or any other type of liability towards its suppliers and lenders.

In such a situation, Corporate Debtor (the one who is going to receive the money) has an option to file an Insolvency petition against the Corporate Creditor (the one who is going to pay the money). Corporate Debtors can recover their money through a very time-bound, transparent and organized process.

Every individual, to whom a particular amount is due, can approach National Company Law Tribunal (NCLT) for the insolvency process.

I. About IBBI Registered Valuers U/S 247 Of The Companies Act, 2013

Valuation exercise is not new to our profession. It is prevalent for many years, especially post liberalization of the economy in 1992. However, valuation as a profession was neither under the purview of any authority nor any specific guidelines or standards were issued for the same. For the first time, Companies Act, 2013 incorporated provisions of Registered Valuers and made mandatory to obtain reports from Registered Valuers w.e.f. 1st February 2019.

In this regards, Ministry of Corporate Affairs (MCA) has issued notification dated 18/Oct/2017 to notify section 247 of the Companies Act , 2013. Section 247 is a governing section for Registered Valuers. MCA has issued The Companies (Registered Valuers and Valuation) Rules, 2017 for procedural matters. Accordingly, IBBI is appointed as Authority to overall supervision, management and registration of Valuers under the Act

II. Section 247 Of Companies Act, 2013

Valuation by registered valuers.—

(1) Where a valuation is required to be made in respect of any property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities under the provision of this Act, it shall be valued by a person having such qualifications and experience and registered as a valuer in such manner, on such terms and conditions as may be prescribed and appointed by the audit committee or in its absence by the Board of Directors of that company.

(2) The valuer appointed under sub-section (1) 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.

(3) If a valuer contravenes the provisions of this section or the rules made thereunder, the valuer shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees: Provided that 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.

(4) Where a valuer has been convicted under sub-section (3), 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.