Stay away from ‘convenience valuations’ and ‘mandate snatching’ activities — this is the government’s suggestion to registered valuers under the companies law. 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 part of efforts to put in place a robust regulatory mechanism for registered valuers, the corporate affairs ministry has come out with draft rules for such entities. “A valuer should not indulge in ‘mandate snatching’ or ‘convenience valuations’ in order to cater to the company’s needs or client needs. “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,” according to the draft rules.
Besides, the ministry has suggested that a valuer as well as his or her relative should not accept gifts or hospitality which undermines or affects the independence as a valuer. “A valuer should not offer gifts or hospitality or a financial or any other advantage to a public servant or any other person, intending to obtain or retain work for himself/ itself, or to obtain or retain an advantage in the conduct of profession for himself/ itself,” it noted. The Insolvency and Bankruptcy Board of India (IBBI) would the registration authority for the valuers.
Among others, IBBI would conduct an examination to test the knowledge, practical skills and ethics of individuals in respect of valuation. The draft rules would be open for comments till June 27. 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, as per chapter XVII of the Companies Act. This chapter pertains to registered valuers.