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BW Businessworld

Setting Standards For Valuators

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The Corporate Affairs Ministry wants to make several changes to the Companies' Bill, which was tabled in the Lok Sabha in the last session of Parliament. The Bill is expected to be referred to the Standing Committee in the next session for deliberations, after which it will come back to the ministry, when the changes can be made, says a senior official.

A major change is regulation of valuators. The Bill, in its present form, only has provisions for registration of professionals such as chartered accountants, advocates, architects and finance consultants as valuators. According to senior officials in the ministry, the details of regulating valuators are being worked out.

"There is a strong need for developing ethics and inducing professionalism in valuations," says Vikas Aggarwal, a Chandigarh-based chartered accountant. "There should be clear guidelines on the dos and don'ts in the profession, provisions of complaints against valuators and penal provisions."

This is important as in some cases, internal valuation of companies can be questioned, and the professional who does the valuation could get embroiled in a dispute, especially during mergers and acquisitions, where the true valuation of companies play a critical role. While giving loans, banks valuate the company on their own, and the internal valuations of the company will not be considered. If there are discrepancies in valuation, it can put the valuator in a spot. A comprehensive regulation can avoid such circumstances, says the ministry official. 

(This story was published in Businessworld Issue Dated 14-09-2009)