Tuesday, 31 October 2017


Securities and Exchange Board of India (SEBI) vide circular no. CIR/ MRD/ DSA/ 14/ 2012 dated May 30, 2012 has provided an exit option to the de-recognized stock exchanges and recognized stock exchanges seeking voluntary surrender of recognition ("exiting RSEs"). 

Companies listed exclusively on exiting or de-recognized RSEs were shifted on Dessimination Board of
BSE/NSE till the time frame promoters of these companies decided upon either:
  1. Permit Exclusively Listed Companies (ELCs) to raise capital to meet listing criteria of Nationwide stock Exchanges
  2. Course of action to be followed by ELCs to give exit options to its public shareholders since these companies have not taken adequate steps to get listed on nationwide stock Exchanges and continue to be placed on Dissemination Board.

As per the SEBI Vide Circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated 10th Oct , 2016 all the dissemination board companies has to file their decision with the respective board by 30th June , 2017.The companies who have or had decided upon providing exit offer to their shareholders has to undertake valuation of the company through appointment of “Independent Valuer” based on the requirement of SEBI circular dated Oct, 2016.


  1. Is a valuer member of a registered valuers organisation
  2. Is recommended by the registered valuers organisation of which he is a valuer member for registration as a valuer
  3. Has passed the valuation examination under rule 5 within three years preceding the date of making an application for registration under rule 6
  4. Possesses the qualifications and experience as specified in rule 4
  5. Is not a minor
  6. Has not been declared to be of unsound mind
  7. Is not an undischarged bankrupt, or has not applied to be adjudicated as a bankrupt
  8. Is a person resident in India; Explanation.─ For the purposes of these rules ‘person resident in India’ shall have the same meaning as defined in clause (v) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999) as far as it is applicable to an individual
  9. Has not been convicted by any competent court for an offence punishable with imprisonment for a
  10. has not been levied a penalty under section 271J of Income-tax Act, 1961 (43 of 1961) and time limit for filing appeal before Commissioner of Income-tax (Appeals) or Income-tax Appellate Tribunal, as the case may be has expired, or such penalty has been confirmed by Income-tax Appellate Tribunal, and five years have not elapsed after levy of such penalty
  11. Is a fit and proper person- (i) integrity, reputation and character, (ii) absence of convictions and restraint orders, and (iii) competence and financial solvency.

The registered valuer shall, while conducting a valuation, comply with the valuation standards as notified or modified under rule 18: Provided that until the valuation standards are notified or modified by the Central Government, a valuer shall make valuations as per-
  1. Internationally accepted valuation standards;
  2. Valuation standards adopted by any registered valuers organisation.

 The registered valuer may obtain inputs for his valuation report or get a separate valuation for an asset class conducted from another registered valuer, in which case he shall fully disclose the details of the inputs and the particulars etc. of the other registered valuer in his report and the liabilities against the resultant valuation, irrespective of the nature of inputs or valuation by the other registered valuer, shall remain of the first mentioned registered valuer.

The valuer shall, in his report, state the following:
  1. Background information of the asset being valued
  2. Purpose of valuation and appointing authority
  3. Identity of the valuer and any other experts involved in the valuation; (d) disclosure of valuer interest or conflict, if any
  4. Date of appointment, valuation date and date of report
  5. Inspections and/or investigations undertaken
  6. Nature and sources of the information used or relied upon
  7. Procedures adopted in carrying out the valuation and valuation standards followed
  8. Restrictions on use of the report, if any
  9. Major factors that were taken into account during the valuation
  10. Conclusion
  11. Caveats, limitations and disclaimers to the extent they explain or elucidate the limitations faced by valuer, which shall not be for the purpose of limiting his responsibility for the valuation report.

The above measures are taken by SEBI are to protect the rights of minority shareholders and provide them liquidity opportunity for their investment. So it is the right and responsibility of each and every shareholders to make sure that the valuation and valuer appointed by their respective invested companies should follow all the rules specified above.

If as a shareholder we find some dissatisfaction on the exit offer been given by the company one can command over to view the valuation report and question on the methodology used to the company and valuer appointed, eg. : In case of NBFC – Investment a valuer should have taken into consideration Investment value of quoted and un-quoted investment and fixed assets of the company been valued to arrive at a fair valuation to be offered under exit option.

If the shareholders fail to get a valid and satisfying answer for their query raised against the valuation report from the company and valuer they have right to address it to SEBI under ScoresComplaint Registration.

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1 comment:

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