Situations Requiring Registered Valuer Under the Companies Act 2013

Posted by Akshay Tiwari on November 29th, 2022

There are various instances where a business might need to undertake the valuation. It might be for certain assets, any undertaking or the business as a whole. Further, in the case of companies, there are instances whereby the Companies Act, 2013 requires the companies to undertake the valuation. Valuation under the Companies Act can be done only by the registered valuers. What are these situations that require a registered valuer under the Companies Act, 2013? Let’s check them out!

Situations That Require Registered Valuers Under Companies Act, 2013

Following are the different situations that require registered valuers under the companies act 2013:

1) Mergers and Acquisitions: In the case of a merger or acquisition between two or more companies, the valuation of the amalgamating company is being carried out. Such valuation shall be done by the registered valuer. Here, the valuation of all the assets, liabilities, securities and properties will be carried out. Further, the valuers are also required to prepare a swap ratio report for the dissenting shareholders who want to exit. They shall be paid the fair value of their shares.

2) Liquidation of Company: In case a company is entering into liquidation, then the registered valuers shall undertake the valuation of the assets and liabilities of the company. These assets will be used to pay off the liabilities and distribution among the shareholders. Further, in case of voluntary winding up, the declaration of insolvency shall be accompanied with a valuation report.

3) Issue of Sweat Equity Shares: Sweat equity shares are issued to the directors for providing any value addition, know-how or any intellectual property to the company. However, it is important to determine their value in order to determine how much sweat equity shares shall be issued. In case the sweat equity shares are issued against the acquisition of any asset, then the value of such asset shall be determined.

4) Non-cash Transactions Involving Directors: In case any non-cash transactions take place as per Section 192 of the Companies Act, 2013 between a director and the company, its holding, subsidiary or associate company relating to the acquisition of any asset, then the value of such asset shall be determined by a registered valuer under Companies Act 2013. Further, particulars of such arrangement along with the value of the asset shall be included along with the notice of the general meeting.

5) Further Issue of Shares: In case a company goes for further issue of shares, then the price of shares for such further issue shall be determined by the registered valuer. Also, in case the shares are allotted on a preferential basis, then such shares shall be offered at a price determined by the registered valuer.

Following were the situations requiring registered valuers under Companies Act, 2013. As per company law, only registered valuers are authorized to undertake valuation in company-related matters. If you require any assistance for the valuation of the company, any assets, liabilities or securities, then feel free to contact the ASC Group.

Orginal Source: