DCA’s group outlines model code for valuation of shares
By Our Markets Bureau | 10 Apr 2003
New Delhi: The department of company affairs (DCA) has made a case for bringing in all listed companies under a new set of uniform “valuation principles on shares” that may be prescribed by the Indian government.
As valuation of shares and computation of exchange ratio are key issues in any scheme or amalgamation or merger of companies, the DCA had set up an expert group on ‘valuation principles for corporate assets and shares and other related matters.’ The group, which has already submitted its report, also outlined a model code of conduct for valuers.
According to the committee, the valuation norms should also be applicable to all unlisted public companies accepting public deposits with a minimum net worth of Rs 25 crore or with a minimum turnover of Rs 150 crore. Further, the committee has also specified the transactions for which independent valuation by the registered valuer would be mandatory.
Except
for the scheme of compromise and the arrangement of a
wholly-owned subsidiary of a company with itself and vice-versa
and a compromise with creditors not amounting to either
a business combination or a spin-off, all schemes of compromise
and
arrangement under Section 391 to 394 of the Companies
Act would require a mandatory valuation, it said. “The
DCA after examining the report will incorporate the same
by amending the Companies Act.”
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