Stakeholders must be certain while carrying out corporate valuation: IT Commissioner
Updated: May 01, 2014 03:45:37pm
New Delhi, May 1 (KNN) There is a need for all the stakeholders, like the dealmakers and practitioners of merger and acquisitions (M&As) to be absolutely sure about the rightness of corporate valuation in the current business scenario, a top Finance Ministry official said.
Addressing a national seminar on ‘Corporate Valuation-Practices and Procedures,’ organised by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), Income Tax Commissioner, Navneet Soni said, “The changes that are coming in the law are really not just necessary but they are very important because in today’s business environment it is not just the taxmen who have to be sure that the valuation is right but the buyer/purchaser or the seller or an expert in mergers and acquisition have to be absolutely sure as to whether you’ve got your valuation right.”
In his brief address at the ASSOCHAM seminar, Soni talked about the kind of valuation from the taxman’s perspective i.e. how the valuation of a company can go wrong, how it can be messed up.
“Whether it is the new Companies Act, 2013 or the promise (or threat, depending on one’s perspective) of the IFRS (International Financial Reporting Standards) implementation or RBI’s policy in removing pricing restrictions in FDI, the resulting implications on the practice of valuation can be potentially far-reaching and not without a fair share of associated challenges,” noted an ASSOCHAM-PWC joint study released at the ASSOCHAM seminar.
“Keeping in view the growing relevance and importance of valuations in business and investment decisions as well as in company processes, the need for education, training, regulation and standardization of the prevalent practices due to inherent limitations to the subject is necessary,” noted the study.
“Credible valuations allow decisions to be taken by the stakeholders in a company with confidence, besides, all existing and would-be stakeholders in a company rely on expert valuations while assessing disclosures made by a company and the degree of risk associated with their decisions.”
Corporate valuations, whether of physical, financial or intangible assets owned by a company, play an important role in guiding decisions involving investment and risk, the study added. “This holds for capital market decisions, corporate restructuring, mergers and amalgamations, formation of joint ventures and strategic alliances between the companies.”
“Valuation of the company and its assets and undertaking in a credible manner, taking into account various aspects relating to it, with the application of well recognized and rational criteria is being perceived as increasingly important, more so as credible valuations allow decisions to be taken by the stakeholders in a company with confidence,” the study said.
Equally, all existing and would-be stakeholders in a company rely on expert valuations while assessing disclosures made by a company and the degree of risk associated with their decisions, it added. (KNN Bureau)
Addressing a national seminar on ‘Corporate Valuation-Practices and Procedures,’ organised by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), Income Tax Commissioner, Navneet Soni said, “The changes that are coming in the law are really not just necessary but they are very important because in today’s business environment it is not just the taxmen who have to be sure that the valuation is right but the buyer/purchaser or the seller or an expert in mergers and acquisition have to be absolutely sure as to whether you’ve got your valuation right.”
In his brief address at the ASSOCHAM seminar, Soni talked about the kind of valuation from the taxman’s perspective i.e. how the valuation of a company can go wrong, how it can be messed up.
“Whether it is the new Companies Act, 2013 or the promise (or threat, depending on one’s perspective) of the IFRS (International Financial Reporting Standards) implementation or RBI’s policy in removing pricing restrictions in FDI, the resulting implications on the practice of valuation can be potentially far-reaching and not without a fair share of associated challenges,” noted an ASSOCHAM-PWC joint study released at the ASSOCHAM seminar.
“Keeping in view the growing relevance and importance of valuations in business and investment decisions as well as in company processes, the need for education, training, regulation and standardization of the prevalent practices due to inherent limitations to the subject is necessary,” noted the study.
“Credible valuations allow decisions to be taken by the stakeholders in a company with confidence, besides, all existing and would-be stakeholders in a company rely on expert valuations while assessing disclosures made by a company and the degree of risk associated with their decisions.”
Corporate valuations, whether of physical, financial or intangible assets owned by a company, play an important role in guiding decisions involving investment and risk, the study added. “This holds for capital market decisions, corporate restructuring, mergers and amalgamations, formation of joint ventures and strategic alliances between the companies.”
“Valuation of the company and its assets and undertaking in a credible manner, taking into account various aspects relating to it, with the application of well recognized and rational criteria is being perceived as increasingly important, more so as credible valuations allow decisions to be taken by the stakeholders in a company with confidence,” the study said.
Equally, all existing and would-be stakeholders in a company rely on expert valuations while assessing disclosures made by a company and the degree of risk associated with their decisions, it added. (KNN Bureau)
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