Govt releases Draft Companies (Registered Valuers and Valuation) Rules, 2017: Invites Comments

The Ministry of Corporate Affairs recently released the Draft Companies (Registered Valuers and Valuation) Rules, 2017. The Draft rules are made with an aim to introduce a robust regulatory mechanism for registered valuers.

As per the draft rules, a registered valuer is required to carry out valuation of assets, net worth of a firm or its liabilities as required under the Companies Act, 2013.

As per Chapter XVII of the Companies Act which pertains to registered valuers, 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.

The Draft Rules mandates the following important conditions which are applicable to registered valuers;

1. A valuer should 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 SEBI (Prohibition of Insider Trading) Regulations, 2015.
2. A valuer should not indulge in ‘mandate snatching’ or ‘convenience valuations’ in order to cater to the company’s needs or client needs.
3. A valuer should communicate in writing with a prior valuer if there is knowledge of any prior valuer having been appointed before accepting the assignment,”
4. A valuer as well as his or her relative should not accept gifts or hospitality which undermines or affects the independence as a valuer.
5. The Insolvency and Bankruptcy Board of India (IBBI) would the registration authority for the valuers.

The draft rules would be open for comments till June 27. Suggestions/ comments on the draft rules along with justifications in brief may be sent through email at comments_rv@mca.gov.in. The notice issued by the ministry requires the name, contact number, email address and postal address of the sender at the time of sending suggestions/comments in the prescribed format.

Read the full text of the draft below.