Valuation professionals evaluate businesses for a variety of purposes. The Insolvency and Bankruptcy Board of India (IBBI) endeavours to change the regulations for valuation professionals. The proposal includes setting up central and state regulators with quasi-judicial powers and providing the right to appeal.
Currently, professionals from different disciplines such as merchant bankers, lawyers, civil engineers, and architects carry out valuations.
Amongst others, IBBI considers a framework for the right educational qualification, an education model, and a body for conducting examinations. The IBBI is also examining whether to allow individuals or organisations to do valuations under different circumstances.
One could expect the new regulations to streamline the valuation of businesses, including their financial assets, plant and machinery, land, building, and intangible assets. IBBI also awaits for a new framework that would complement the new bankruptcy ecosystem for cleaning up bad loans. The new bankruptcy ecosystem has helped in the recovery of bad loans by lenders. A majority of the lenders have brought in new investors and placed the company under a court-monitored process.
The new regulations would cover business valuations such as mergers and acquisitions, as well as the valuation of insolvent companies. IBBI is actively organising workshops across the country to discuss and design the new law. Based on the discussions, the government could either lay down the guiding principles or frame detailed rules. The government will also lay down the transition rules to the new law for both professionals and businesses.
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I am a Chartered Accountant by profession. I specialise in personal taxes and corporate income tax matters. I am an avid reader and track developments in financial markets, economy and other market developments.