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VALUATION OF SECURITY / FINANCIAL ASSETS

 

  • Valuation Examination for Asset Class- Securities or Financial Assets

31st December, 2017


In pursuance of the first proviso to rule 5 (1) of the Companies (Registered Valuers and Valuation) Rules, 2017, the Insolvency and Bankruptcy Board of India, being the Authority, hereby specifies the details of educational courses for the Asset Class of Securities or Financial Assets as under:


i. Syllabus

Sl. No. Coverage Weight (%)
a Micro-Economics
National Income Accounting
Basics of Fiscal Policy
Basics of Monetary Policy
Understanding Business cycles
4
b Finance
Basic Concepts of Finance
Decisions in Finance
Financial Markets and Securities Markets
3
c Professional Ethics and Standards
Model Code of Conduct as notified by MCA
Other Engagement Considerations
5
d Financial Statement Analysis
Assets, Liabilities, Income and Expenses.
Performance Analysis, Capital Structure Analysis
Credit Analysis
Cash Flow Analysis
3
e General laws and Judicial Pronouncements
Registered Valuers and Valuation Rules, 2017
- - Valuation Standards
- - Registered Valuers Organisation
- - Registration of Valuers
- - Asset Classes

Indian Contract Act, 1872
- - Offer, Acceptance and Revocation
- - Legal Contract, Void and Voidable Contracts
- - Contingent Contracts
- - Performance of Contracts
- - Consequences of Breach of Contract
- - Agency Agreements

The Sale of Goods Act, 1930
- - Contract of Sale
- - Definition of Goods
- - Price of Goods
- - Conditions and Warranties
- - Unpaid Seller

The Transfer of Property Act, 1882
- - Definition of Immovable Property
- - Transfer and Sale of Property
- - Rights and Labilities of Buyer and Seller
- - Mortgage of Property
- - Rights and Liabilities of Mortgager and Mortgage
- - Gift of Immovable Property
- - Lease

Indian Stamps Act, 1899
- - Basics of Indian Stamp Act
- - Valuation for Duty
- - Instruments on which duty is levied

Income Tax Act, 1961
- - Taxes on Individuals
- - Taxes on Companies and other entities
- - Heads of Income- Salary, House Property, Business Income, Capital gain and Income from other sources
- - Clubbing and Set off provisions

Insolvency and Bankruptcy Code, 2016
- - Corporate Insolvency Resolution
- - Corporate Liquidation

Judicial pronouncements
- - Important Judicial Precedents of Valuation
18
f Overview of Valuation
- - Meaning of Value
- - Premise of Valuation
- - Purpose of Valuation
- - Valuation Engagements
- - Valuation Process
- - Valuation Report
- - Documentation
5
g Valuation Approaches and Methodologies

- - Income Approach

- - Market Approach

- - Cost Approach

5
h Valuation Application
Equity / Business Valuation –
- - Analysis of Business Environment
- - Entity's Business Strategy Analysis
.
- - Business Combination- Amalgamation, Merger, Demerger, Arrangement & Restructuring
- - Forecasting
- - Cash flow Analysis
- - Appropriate Cost of Capital / Rate of Return
- - Valuation Adjustments

Fixed Income Securities
- - Types of Fixed Income Securities
- - Types of Different Debt Instruments
- - Terms used in Fixed Income Securities
- - Credit Rating of Bonds
- - Embedded Options
- - Interest Rate Derivative Products
- - Related FIMMDA Circulars

Option valuation
- - General Principles
- - Option Valuation Models – Black and Scholes Valuation Methodology, Black and Scholes Merton Option Pricing Method
- - Binomial Tree Method, Monte Carlo Simulation
- - Valuation of other Financial Assets and Liabilities

Intangible Assets
- - Nature and Classification of Intangibles
- - Identification of Nature of Intangible Assets
- - Purpose of Intangibles Valuation
- - Valuation Approaches

Valuation Application: Situation Specific Valuation
- - Business Combination – Amalgamation, Merger, Demerger, Arrangement & Restructuring
- - Distressed Asset Valuation
- - Start-up Entities Valuation
- - Valuation of Small and Medium Enterprises
- - Valuation of Cyclical Firms
- - Valuation of Investment Entities
- - Valuation for Insurance Coverage

33
i Laws and Regulations relevant to Financial Assets Valuation
Financial Reporting
- -Financial Reporting (Indian Accounting Standards), Ind AS 113

The Companies Act, 2013
- - Chapter IV - Share Capital and Debenture
- - Chapter XV - Compromise Arrangements and Amalgamation and Relevant Rules
- - Chapter XX - Winding Up

SEBI Regulations
- - SEBI (ICDR), 2009
- - SEBI (LODR), 2015
- - SEBI (Mutual Fund) Regulations, 1996
- - SEBI (Share based Employee Benefits) Regulation, 2014
- - SEBI (SAST) Regulations, 2011,
- - SEBI(Delisting) Regulations
- - ESOP Valuation

RBI and FEMA Regulations
- - FEMA (Transfer or Issue of Security by a Person Resident Outside India), Regulations, 2017
- - Foreign Direct Investment (Pricing Guidelines)
- - Direct Investment by Residents in Joint Venture/ Wholly Owned Subsidiary abroad.
- - Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks.
- - Guidelines on Sale of Stressed Assets by Banks
- - SARFESI Act, 2002

Income Tax and Other Statues
- - Capital Gain on Transfer of Assets
- - Taxation on Income of Corporate Entities, Partnership
- - Carry Forward of Losses
- - Compliance of DTAA Agreements.
10
j Market Approach to Value
Case Studies (This section will have 2 case studies for application of valuation techniques. There will be two comprehensions narrating the transaction based on which questions will be asked from each case.)
14

Total:

100


Note:-

Wherever any Law, Act of Parliament or any Rule is referred in the syllabus, the same shall be taken as updated as on 31st December, 2017.

ii. Format of Examination:

The Format of Examination is as under:

a. The examination is conducted online (computer-based in a proctored environment) with objective multiple-choice questions;

b. The duration of the examination is 2 hours;

c. A candidate is required to answer all questions;

d. A wrong answer attracts a negative mark of 25% of the marks assigned for the question;

e. A candidate needs to secure 60% of marks for passing;

f. A successful candidate is awarded a certificate by the Authority;

g. A candidate is issued a temporary mark sheet on submission of answer paper; and

h. No workbook or study material is allowed or provided.

i. A candidate may use a non-memory based calculator. No mobile phone is allowed.


iii. Frequency of Examination:

The frequency of Examination is as under:

a. The examination is available from a number of locations in the country;

b. The examination is available on every working day;

c. A candidate needs to provide PAN and Aadhaar to enroll for the examination.

Note:

For More Details Call on: 020 26823456

Or mail your queries on : postmasteriiv@rediffmail.com



 

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