Sebi to consult CAs, merchant bankers on takeover valuations

To ensure fair treatment of minority investors during takeovers of listed companies, regulator Sebi has decided to seek help of chartered accountants and merchant bankers for an independent valuation of the price offered to small shareholders by new promoters.
For the purpose, Sebi would empanel eligible Chartered Accountant firms to take up work relating to valuation of shares under its Takeover Regulations, that involves the entities buying a substantial stake in a listed company to make an open offer for minority shareholders as well.
These CAs would also be consulted on valuation of assets in relation to schemes of arrangement undertaken by the listed companies, Sebi said in a public notice while inviting applications from eligible CAs.

Besides, Sebi might also get valuation of the shares done by an independent merchant banker, other than the one appointed by the concerned company. These valuations would be undertaken by Sebi while processing the draft schemes of arrangement filed with it by the companies.
Sebi has decided to empanel eligible CAs who can be asked to undertake the valuation work as and when a need is felt to obtain an independent feedback on the takeover or scheme related case at hand.
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 would be compensated by the concerned company and Sebi would not make any payment to the empanelled CA firm which is assigned a case. However, the applicable fee structure for this purpose has been put in place by Sebi.
Among various eligibility conditions, the CA firm should be empanelled with RBI and should have a minimum experience of 10 years.
It would also need to have handled valuation related assignments in areas like acquisition or sale of a business or equity stake, should have a minimum of four full time partners and no disciplinary action or proceedings should have been initiated against it or its partners by ICAI, any other regulatory agency or courts.