The Securities and Exchange Commission of Pakistan (SECP) will make it mandatory for the valuers (companies) rendering services for valuation of physical assets, immoveable property, intangible assets/securities, financial assets/liabilities, etc, to obtain prior registration of the commission.
According to the SRO.1069 (I)/2017 issued here on Tuesday by the SECP, the commission has issued draft of regulations for valuers.
According to the regulations, "valuer" means a company, registered under these regulations as valuer, which is rendering services for valuation of physical assets, immoveable property, intangible assets, securities, financial assets or liabilities, etc.
The SECP said that no person shall act as a valuer unless such person is registered by the Commission under these regulations. On commencement of these Regulations any person providing services as a valuer shall seek registration in accordance with these Regulations within six months of such commencement.
Services to be provided by the valuer: Only such valuer who is registered under these Regulations shall be eligible to provide the following valuation services in accordance with terms and conditions of their registration, in the area specified for each category of registration:-
They would provide valuation services to banks including all scheduled or Commercial Banks, Islamic Banks, Microfinance Banks, Provincial Banks, Foreign Banks maintaining branches in Pakistan and Development Financial Institutions (DFIs), under the regulatory requirement of State Bank of Pakistan, laid down in Prudential Regulations issued by of State Bank of Pakistan; valuation services to NBFCs carrying out investment finance services, leasing, housing finance services under of Non-Banking Finance Companies and Notified Entities Regulations, 2008, issued by the Commission and valuation services to Modaraba companies and Modarabas, registered and floated under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980.
Valuers would provide valuation services to Real Estate Investment Trust (RIET), management company licensed by the Commission under Real Estate Investment Trust Regulations, 2008; valuation services to listed companies that are subject to public announcement of offer, under regulation 13 (e) of Listed Companies (Substantial Acquisition of Voting Shares & Takeovers) Regulations, 2017 framed under Securities Act 2015, where determination of price per share of such company, for the purpose of public offer, is to be calculated on the basis of net assets valued; valuation services to all Public companies registered with the Commission under the Companies Act, the rules and regulations made thereunder.
Provided that no institution or industry requiring the services of valuers shall maintain its approved list of valuers or impose any other entry barriers on the basis of prequalification of valuers.
The valuers shall provide valuation services for any other purpose as notified by the Commission or any other body as recognized by the Commission, from time to time.
The SECP said that the eligibility criteria of valuers included a company incorporated under the Companies Act, shall be eligible for applying to the Commission for registration provided its promoters or sponsors, and directors fulfil the Fit and Proper criteria as specified.
A company, meeting the eligibility criteria provided in regulation 4, may apply to the Commission on Form A, along with non-refundable processing fee as prescribed in schedule I, for registration as a Valuer for one or more of the categories mentioned:
Category - I: to carry out valuation of immovable property, land and buildings including all kinds or agricultural, residential and commercial land and all kinds of residential and commercial structures and buildings, excluding industrial plants and infrastructural construction.
Category - II: to carry out valuation of plant and machinery, including industrial plants and machinery and infrastructural construction such as telecommunication networks, roads and highways, railway tracks, water and sewerage lines, etc.
Category - III: to carry out valuation of inventories of raw material, unfinished and finished goods, commodities and agricultural produce;
Category - IV: to carry out valuation of securities, intangible assets (eg goodwill, intellectual property, technical or other services), financial assets, financial liabilities, etc.
Category - V: to carry out valuation of Information Systems and Infrastructure Assets including Hardware and Software, etc.
The Commission shall, after making necessary inquiries and obtaining such further information, as it may consider necessary, grant approval for registration as valuer, subject to the following conditions:
The valuer shall engage following professionals for providing services on assignment basis, having working experience, on a full time basis, for a period of not less than five years and having membership of recognized professional bodies or the prescribed qualification, to conduct the valuation.
Provided that the Commission may, from time to time through notification in the official gazette, prescribe such other competence and qualification for registration on any of the above mentioned categories, as it may deem appropriate.
The SECP said that the valuers shall have duly operated office, staffed with qualified experts as prescribed in the regulations, and has put in place necessary infrastructure including but not limited to adequate office space owned or rented out by themselves or their director(s), equipment and human resource with sufficient education, experience and expertise to perform the functions of a valuer.
Chief executive of the valuer shall not hold such office in any other valuer. (d) the company is not part of a group of companies (associated and subsidiary companies) already holding a registration, under these regulations, for valuer in that category. The company, promoters or sponsors, chief executive and directors shall furnish separate undertakings to the Commission that they shall comply in letter and spirit with the requirements of these regulations and the directions issued by the Commission.
All persons subject to fit and proper criteria shall submit an affidavit to the Commission affirming under the oath that the person and the companies, firms, sole proprietorship etc. where the person is a chief executive, director (other than nominee director) and owner or partner etc. has no overdue payment of any financial institution of more than five hundred thousand.
The valuer shall submit to the commission evidence of compliance of these regulations and conditions, along with non-refundable registration fee, within 90 days of the approval, extendable for 60 days, failing which the approval shall lapse.
The Commission shall issue certificate of registration as per Form B, and also place his name in the list of registered valuers on its website.
A valuer in carrying out the valuation assignment shall ensure that the valuation is determined by the qualified expert, for the relevant category; maintain the eligibility criteria provided in regulation 4 and notify to the Commission immediately if it ceases to fulfill any of the conditions prescribed in the said regulation and not accept valuers assignment without a formal request communicated electronically through an email or in a printed form through courier, and such request shall allow a reasonable time for efficient disposal of the valuation assignments.
A valuer in carrying out the valuation assignment shall ensure that before accepting an assignment, disclose to the client the existence of any direct or indirect any interest which valuer may have in respect of such assignment, including but not limited to any other business relationship with the client, its director, officers or have been an employee of the client during the last two years.
A valuer in carrying out the valuation assignment shall not act for two or more parties in the same matter, without full disclosure to all parties concerned; not accept an assignment that includes reporting of the outcome based on predetermined opinions and conclusions required by the client and not divulge verbally or in writing, any information of a confidential nature which he or she has obtained in exercising his or her powers or performing his or her duties, except if required to do so in terms of the regulations or any other law.
A valuer in carrying out the valuation assignment shall ensure that the valuation methodology adopted by it is in line with best practices prevalent in the valuation industry; conform to the valuation standards prescribed by International Valuation Standards Council (IVSC) to the extent possible in terms of valuation report or such valuation standards as may be notified and shall certify the same in the valuation report and shall be realistic, relevant and adequately substantiated by reference to physical, functional and market factors.
The valuer shall ensure that the Chief Executive shall sign all valuation reports and other documentation relating to valuation or delegate the authority; valuation approval process is carried out without undue intervention or influence from shareholders, its management or its board of directors and the employees and qualified experts engaged for valuation shall disclose his or her interest, whether directly or indirectly, to the chief executive of the valuer, in writing, before start of the assignment, the SECP added.
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