Panel says set up council of peers to check valuers

Panel says set up council of peers to check valuers

New Delhi: A committee set up by the government to look at how the working of valuation professionals can be regulated has suggested that a council of peers can review the conduct of any valuation professional and also the affairs of the company as such, according a person closely associated with the matter, who did not want to be identified.

The committee, headed by the secretary general of the Federation of Indian Chambers of Commerce and Industry (Ficci), Amit Mitra, has suggested that nominated members of the council of valuation professionals, which will govern the proposed institute for valuation professionals, can do this.

The committee has also said the institute of valuation professionals should be an autonomous and corporate professional body with a chairman, a governing body or the council of 20 experts, and registered valuers.

Professionals valuers will value the assets, properties, tangibles and intangibles of companies before they go in for mergers and acquisitions (M&A) or initial public offerings.

“Currently, professional institutes such as the Institute of Chartered Accountants of India (Icai) and the Institute of Company Secretaries of India merely investigate the respective chartered accountant or company secretary for any professional misconduct in a company. In this case disciplinary action against valuers may extend to the firm in instances of scandals or frauds," added the same person.

This person said, citing the committee’s report, that members nominated to the council would be senior chartered accountants, cost and work accountants, company secretaries, representatives of the Institute of Actuaries, Reserve Bank of India, Securities and Exchange Board of India and industry lobby groups such as Ficci and Confederation of Indian Industry.

The report is being evaluated by ministry of corporate affairs, which will soon introduce a Bill on valuation professionals in Parliament. An official at the ministry confirmed that the committee’s recommendations were being considered.

The concept of a valuation professional is new and part of new Companies Bill that was introduced in Parliament this year and which is being reviewed by a Parliamentary standing committee.

A standing committee advises Parliament on policy issues.

“...Valuation in respect of any property, stocks, shares, debentures, securities, goodwill or net worth of a company or its assets shall be valued by a person registered as a valuer, appointed by the audit committee or in its absence by the board of directors of the company," says clause 218 of the new Companies Bill.

The committee has also said that any graduate who can clear certain specialized papers, especially relating to accounting, legal and financial matters, can be a registered valuer.

Existing chartered accountants, cost and work accountants and company secretaries who want to practise as registered valuers will also have to clear a test.

These valuers will be monitored by the government, according to the new Companies Bill.

“The Central government shall maintain a register called the register of valuers in which names and addresses of persons registered as valuers are to be recorded," says the Bill.

Ved Jain, former president of Icai and a government nominee on the board of Maytas Infra Ltd, said: “While the idea of extending disciplinary action on the company for any misconduct is good, it might be difficult to implement. Proving any misconduct against a company is not such an easy job and requires multiple investigations."