SEBI to empanel CA firms for independent valuation opinion in takeovers

By TEAM VCC

  • 19 Jan 2015

Securities market regulator SEBI is creating a panel of Chartered Accountant (CA) firms which would provide an independent opinion on valuation of listed firms at the time of takeovers. It has called for applications for getting empanelment.

In terms of regulation 8(16) of the Takeover Regulations, SEBI may require valuation of the shares by an independent merchant banker other than the manager to the open offer or an independent CA in practice

having a minimum experience of 10 years, for ascertaining the offer price under regulations 8(2)(e) and 8(4) of the Takeover Regulations.

“In this context, it has been decided by SEBI to empanel CAs who may be entrusted with undertaking valuation work as described above, as and when a need is felt to obtain an independent feedback on the takeover or scheme related case at hand,” it said.

SEBI’s note says that upon entrustment of any particular work, the CA firm will be obliged to disclose any conflict of interest it or any of its partners may have, if they were to undertake the specific assignment and remit it back to SEBI.

The CA firms shall be compensated by the subject company and SEBI shall not make any payment to the empanelled CA firm which is assigned a case.

SEBI has said that CA firms which are empanelled with RBI, have a minimum experience of 10 years (as of December 31, 2014) and have handled valuation related assignments pertaining to takeovers or sale of a business or for mergers/demergers in the last five years would be eligible for empanelment.

In addition, such firms should have a minimum of four full-time partners, at least two of the partners in the firm should be FCA and no disciplinary action/proceedings should have been initiated against the firm/its partners by ICAI or any regulatory agency or court.

(Edited by Joby Puthuparampil Johnson)