S & FA



Insolvency and Bankruptcy Board of India

Subject: Valuation Examination for Asset Class- Securities or Financial Assets

30th December, 2017

In pursuance of the rule 5 (3) of the Companies (Registered Valuers and Valuation) Rules, 2017, the Insolvency and Bankruptcy Board of India, being the Authority, hereby publishes the syllabus, format and frequency of the ‘Valuation Examination’ for the asset class: Securities or Financial Assets.

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 Mortgagee
    • - 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
  • 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 enrol for the examination.

Further details about the examination will be provided subsequently.

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