INSPECTION POLICY

RVO Estate Managers & Appraisers Foundation | IBBI RECOGNISED RVO

INSPECTION POLICY 1. INTRODUCTION Following extracts from the Monitoring Policy, as approved by the Governing Board of RVO Estate Manger & Appraises Foundation, are relevant to understand the requirement to draw an Inspection Policy of the company. RVO Estate Managers & Appraisers Foundation (herein after refer to as RVO ESMA) has framed its Monitoring Policy to monitor the professional activities and conducts of the members strictly as per the provisions of Companies Act, 2013, The Companies (Registered Valuers and Valuation) Rules , 2017 Regulations and guidelines issued there under, as well as our bye-laws and code of conduct. 1.1 The objective of the inspection is to gather necessary information, records and documents to enable the monitoring committee, Governing Board of RVO ESMA Foundation and the Insolvency and Bankruptcy Board of India (IBBI in short) to inspect the performance and keep them informed with unbiased decision about the performance of our Registered Valuer Members. 1.2. The Monitoring Committee is assigned the function to undertake inspection and implement an appropriate check list and evaluation format to calculate ‘overall compliance point index’ which shall determine the degree of compliance with respect to provision of the act, rules, regulation, guidelines, byelaws, the Code of Conduct and the directions given by the Governing Board. In compliance of the aforesaid, the Governing Board of the RVO Estate Managers & Appraisers Foundation, under due intimation and/or approval of the Insolvency and Bankruptcy Board of India, has adopted this Inspection This inspection policy is an integral part of the Monitoring 2. OBJECTIVE The objective of Inspection Policy is to ensure that in carrying out the valuation services, the registered valuer members of RVO Estate Managers & Appraisers Foundation comply with the Valuation Standards, Code of Conduct, and relevant provisions of the Act & Rules made there under. In addition, they have proper systems and procedures, including documentation systems, so as to maintain highest standards of quality in the work they perform. The inspections shall also help the RVO ESMA to guide the member to remove its shortcomings, if any. 3. DEFINITIONS In this Policy, unless the context otherwise requires: “Act” means the Companies Act 2013; “Authority” means the Insolvency and Bankruptcy Board of India (IBBI); "Asset Class" means distinct group of assets that have been classified as class of assets by the Insolvency and Bankruptcy Board of India and requires separate set of valuers for valuation under the (Registered Valuers and Valuation) Rules, 2017 “Committee” means the Monitoring Committee constituted by the Governing Board of the in terms of clauses of the Bye-Law of RVO ESMA; "Monitoring Officer" means an Officer of RVO ESMA either appointed or designated so, who shall perform the functions assigned to the Monitoring Officer under the Monitoring Policy and Inspection Policy; “Partnership entity” means a partnership firm registered under the Indian Partnership Act, 1932 (9 of 1932) or a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009); “Governing Board” means the Board of Directors of RVO ESMA constituted under clause 4 of the Bye-Laws of RVO ESMA; “Organisation” means the RVO Estate Managers & Appraisers Foundation Organisation (RVO ESMA), a section 8 Company, registered with Insolvency and Bankruptcy Board of India; “Bye-Laws” means Bye-Laws of the RVO Estate Managers & Appraisers Foundation ( RVO ESMA) based on the Companies (Registered Valuers and Valuation) Rules, 2017 (Model Bye-Laws of Registered Valuers Organisation); “IBBI" means the Insolvency and Bankruptcy Board of India established under section 188 of the Insolvency and Bankruptcy Code, 2016; “Code of Conduct” means the code of conduct for the registered valuer as written “Policy” means the Disciplinary Policy of RVO ESMA; “Registered Valuer Member” means an individual who is enrolled with RVO ESMA and registered with IBBI and includes an individual who was a member of RVO ESMA as on the date of the alleged misconduct; "Partnership entity" means a partnership firm registered under the Indian Partnership Act, 1932 (9 of 1932) or a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009); "Rules" means the Companies (Registered Valuers and Valuation) Rules, 2017 as amended from time to time; "Valuation Standards" means the standards of valuation as notified or modified by the Central Government under Rule 18 of the Companies (Registered Valuers and Valuation) Rules, 2017;Provided that until the valuation standards are notified or modified by the Central Government, the valuation standards would mean the standards of valuation adopted by the RVO Estate Managers & Appraisers Foundation ( RVO ESMA); "Registered Valuers Organisation (RVO)" means a legal entity recognized as registered valuers organization by the Insolvency and Bankruptcy Board of India under Rule 13 of the Companies (Registered Valuers and Valuation) Rules, 2017; All words and expressions used and not defined in this Policy, but defined in the Act, Companies (Registered Valuers and Valuation) Rules, 2017, shall have the same meaning as assigned to them in the Act. "RVO ESMA" means the RVO Estate Managers & Appraisers Foundation duly incorporated as section 8 company under the Companies Act, 2013 with its registered office at House number 208, Block HB, Salt Lake and recognized as registered valuers organization by the Insolvency and Bankruptcy Board of India under Rule 13 of the Companies (Registered Valuers and Valuation) Rules, 2017. "Registered Valuer" means a person who has been granted certificate of registration by the authority under Rule 6 of the Companies (Registered Valuers and Valuation) Rules, 2017 and has been granted certificate of practice by the RVO ESMA in respect of valuation of an asset class or classes and the term "valuer" shall be construed "Registered Valuer Member" means a person who possess the required qualification and experience as per Rule 4 of the Companies (Registered Valuers and Valuation) Rules, 2017 and has completed the mandatory educational course as a student member of the RVO ESMA in respect of valuation of an asset class or classes; Unless the context otherwise requires, words and expressions used but not defined in this policy shall have the meanings respectively assigned to them in the Companies Act, 2013 (18 of 2013) and Rules made there under. 4. COMPLIANT STATUS In the Monitoring Policy, it is said that based on the records submitted by the registered valuer members, the Monitoring Committee will evaluate the performance of the members and categorize them into three categories:- Category A – Compliant: Members submitting the information regularly and fully complying with the provisions of the Act, rules, regulations, and guidelines issued there under, and the bye-laws, the Code of Conduct, and directions given by the Governing Category B - Non-Compliant: Members who are not filing any information with the Monitoring Committee at all are considered as Non-Compliant. COVERAGE & EFFECTIVE DATE The Inspection Policy shall be implemented from the first day of April, 2020. This will be introduced in stages, At first stage, registered valuer members who have been categorized as "Non- Compliant" shall be selected for inspection on a random sample basis. Second & final stage will include members that are fully "Compliant" as per the Monitoring Committee. It is proposed to cover following number of registered valuer members under the stated inspections over a period of five years: Non-Compliant cases - 100 percent Fully Compliant cases - 5 percent (random survey) The Monitoring Committee shall decide the names of practicing registered valuer members belonging to each asset class to be included in the final selection list of each year. Efforts would be made to ensure that each registered valuer member who is presently 'non-compliant' is subjected to inspection at least once in five years and is brought to the fully compliant category. Further, the Committee shall ensure that all other members having substantial scale of practice and handling important valuation The Monitoring Committee shall decide the names of practicing registered valuer members belonging to each asset class to be included in the final selection list of each year. Efforts would be made to ensure that each registered valuer member who is presently 'non-compliant' is subjected to inspection at least once in five years and is brought to the fully compliant category. Further, the Committee shall ensure that all other members having substantial scale of practice and handling important valuation. The inspection may vary from above in case of the followings: Review of the information / documents received from the registered valuer members; Any information received from other stakeholders and regulators; Any information received from the third party sources; and On the direction of the Governing Board of RVO ESMA and/or from the Any order/direction from any competent Court of 6. PERIOD OF INSPECTION The period of inspection shall be In case of a member with registration more than three years old, period of inspection shall be from the end-date covered under the last inspection till end of preceding completed financial year; or preceding three years, whichever is In case of a member with registration less than three years old, period of inspection shall be from the date of registration till end of preceding completed financial Provided that no part of the reports, records and documents relating to the valuation assignments completed on or before the date of registration shall be subject to inspection and review. Note: No registered valuer member shall be selected for inspection if he/she is in practice for less than one year. 7. SCOPE OF INSPECTION The stated Inspection process shall apply to all the Valuation Services provided by a member as registered valuer under the provisions of Companies Act, 2013 and Rules made thereunder. Once a registered valuer member is selected for inspection, its valuation engagement records and compliance records pertaining to the period of inspection shall be subjected to inspection. The inspection shall cover: Compliance with the provisions of the Act, rules, regulations, and guidelines issued thereunder; Compliance with the Bye-Laws, the Code of Conduct, and directions given by the Governing Board of RVO ESMA; Compliance with Valuation Standards; Systems and procedures for conducting valuation engagements Quality of reporting; and Training programmes for staff concerned with valuation functions, including availability of appropriate 8. COMPOSITION OF INSPECTION TEAM Monitoring Policy provides that the Monitoring Committee may direct the inspection to be carried out by any member of the Committee, or officer of RVO ESMA, or member of the Governing Board of RVO ESMA, or other professional valuer member(s), either individually or jointly with other members or officers in any manner as determined by the Monitoring Committee. It is hereby set out that the officer of RVO ESMA who may be assigned the job to carry out inspection of any registered valuer member shall not be of the rank below level-IV. It is further set out here that the other professional valuer member(s) must be the registered valuer member of RVO ESMA; possess at least ten years of experience of valuation [including the period before registration with IBBI]; be currently in the active practice of valuation in respect of asset class(es) for which he is undertaking inspection assignments; For undertaking inspections, a valuer member should not have been declared to be of unsound mind; been an undischarged bankrupt or applied to be adjudged as a bankrupt; been a non-resident person in India; any disciplinary or criminal action/proceedings pending against him; been found guilty by the Disciplinary Committee or Governing Board of RVO ESMA or by the IBBI; been convicted by any competent court for an offence punishable with imprisonment for a term exceeding six months or for an offence involving moral turpitude; been levied a penalty under section 271J of Income Tax Act, 1961; been imposed any warning or penalty or strictures against him by the competent authority; or been categorized as semi-compliant or non-compliant by the Monitoring Committee of RVO Any valuer member empanelled for undertaking inspection on behalf of RVO ESMA shall undergo requisite training as prescribed by the Monitoring Committee of RVO ESMA; furnish the prescribed declaration at the time of accepting any inspection assignment; and sign the prescribed Deed of The Monitoring Committee shall maintain a panel of eligible and willing registered valuer member(s) who offer themselves to be considered for part of the inspection team of RVO The panel shall be valid for a period of two years and made public on the company's website. A registered valuer member shall not accept any professional assignment from another registered valuer member whose records have been inspected by him for a period two years from the date of 9. REPORTING On completion of a inspection visit to the registered valuer member, the Team shall submit its report to the Monitoring Officer setting out the scope of the inspection, the extent to which the registered valuer member complied with the terms of reference of team and relevant law and practice and other legislation, the extent to which professional competence has been tested and achieved and any other information which the Inspection Team would like to add in the report. As part of the record, the Inspection Report shall contain the following information: Details of entity and registration of its proprietor/partner(s)/ director(s) with the IBBI; Details of staff kept by the Member during the period of inspection; Details of office systems and procedures with regard to compliance with the provisions of the Act, rules, regulations, and guidelines issued thereunder; or compliance with the Bye-Laws, the Code of Conduct, and directions given by the Governing Board of RVO ESMA; Details of training program for the staff with valuation functions; Whether the Registered Valuer Member fully cooperated with the Inspection Team; and Whether he allowed complete and free access to RVO ESMA inspection team to undertake inspection of his information and records; The Inspection Team shall examine and answer each of the following points with supportive reasons. If the answer to any issue is negative, the report shall contain the nature of shortcomings and also suggest steps to remove them within a reasonable period. Whether the Registered Valuer Member has regularly filed necessary reports and returns with the RVO ESMA; Whether the Registered Valuer Member has conducted valuations only in respect of those assets or asset class(es) for which he is registered with the IBBI; Whether the Registered Valuer Member has, while undertaking valuation assignments, fully adhered with the applicable provisions of Companies Act, 2013; Whether the Registered Valuer Member has fully adhered with the conditions of registration set-out in Rule 7 of the Companies (Registered Valuers and Valuation) Rules, 2017; Whether the Registered Valuer Member has, while undertaking valuation assignments, fully complied with the Valuation Standards as required under Rule 8(1) of the Companies (Registered Valuers and Valuation) Rules, 2017; Whether the Registered Valuer Member has, while undertaking valuation assignments, fully complied with the provisions of Rule 8(2) & (3) of the Companies (Registered Valuers and Valuation) Rules, 2017; Whether the Registered Valuer Member has maintained all the reports, records and documents relating to valuation assignments for the prescribed period of three years from the completion of each such assignment as required under Rule 7(f) of the Companies (Registered Valuers and Valuation) Rules, 2017; Whether the Registered Valuer Member as fully complied with the Code of Conduct of RVO ESMA; if not, state the clauses thereof violated; Note: The Inspection Team is required to give its observations/ comments on adherence by the Registered Valuer Member separately with each clause of the Code of Conduct. Whether, during the period of inspection, the Registered Valuer Member has temporarily surrendered / restored his membership with the RVO ESMA in compliance with the provisions of Rule 9 of the Companies (Registered Valuers and Valuation) Rules, 2017; Whether, during the period of inspection, Any complaint was received against the Registered Valuer Member with respect to the: Valuation engagements; Non-compliance with the regulatory provisions under any law; or General conduct of the Registered Valuer Member with his clients & other Any Valuations were challenged in any Court; Any warnings or penalties or strictures were imposed by the competent authority; Any Disciplinary proceedings were initiated against the member; Any legal action was initiated against the member; He was conviction for an offence; Any criminal proceedings are pending against the member; He has applied or declared as un-discharged Whether the Registered Valuer Member has satisfactory mechanism in place for redressal of all grievances received; also provide the following details: Number of grievances received and disposed off; Nature/type of grievances received; Average period of disposal of grievances; and Percentage of cases where any grievance was readdressed by the complainant In case a partnership entity or company is the registered valuer, whether only the partner or director who is a registered valuer for the asset class(es) that were valued was allowed to sign and act on behalf of it; In case a partnership entity or company is the registered valuer, whether it disclosed to the company concerned, the extent of capital employed or contributed in the partnership entity or the company by the partner or director, as the case may be, who signed and acted in respect of relevant valuation assignment for the company; In case a partnership entity or company is the registered valuer, whether it immediately informed the authority on the removal of a partner or director, as the case may be, who was a registered valuer along with detailed reasons for such removal; and Any other issue considered important by the inspection 10. OBLIGATIONS OF THE REGISTERED VALUER MEMBERS Any registered valuer member selected for inspection shall Produce to the inspection team or allow access to, any record, document or prescribed register maintained by the member or any other record or document which is of a class or description so specified, and which is in the possession or under the control of the member; Provide to the inspection team such explanation or further particulars in respect of anything produced in compliance with a requirement under sub clause (i) above, as the inspection team shall specify; and Provide the inspection team all assistance in connection with inspection; Where any information or matter relevant to a registered valuer member is recorded otherwise than in a legible form, the member shall provide and present to the inspection team a reproduction of any such information or matter, or of the relevant part of it in a legible form, with a translation in English or Hindi if the matter is in any other language, and if such translation is requested for by the inspection team. The registered valuer member shall, within 30 days of receipt of the bills from the inspection team, pay to the inspection team the cost of inspection including the out of pocket expenses as decided by the Monitoring Committee. 11. OBLIGATIONS OF THE INSPECTION TEAM The inspection team shall, while undertaking inspection of a registered valuer member, shall strictly comply with the terms of reference assigned to it as part of its appointment. The inspection team shall not take any extracts of the registered valuer member ‘Clients’ file or records examined by the team while conducting inspection, as a part of his working papers. The inspection team shall complete the inspection within the prescribed time frame. The inspection team shall raise bills to the registered valuer member covering the cost of inspection and out of pocket expenses as decided by the Monitoring Committee. 12. COST OF INSPECTION The cost of inspection including the limit of out of pocket expenses payable to the inspection team shall be decided by the Monitoring Committee from time to time and shall be paid by the registered valuer member. The amount shall be paid by the registered valuer member within 30 days of receipt of the bills from the inspection team. 13. FUNCTIONS OF THE MONITORING COMMITTEE The Inspection Reports shall be received and analyzed by the Monitoring Officer. He shall prepare [or cause to prepare] summary of all the inspect reports received during a quarter for onward submission to the Monitoring Committee. The Monitoring Committee shall review the summary reports and give such directions as deemed necessary. As set out in the Monitoring Policy, the Monitoring Committee will take reasonable steps in seeking to confirm compliance on the part of Registered Valuer Members with all relevant aspects of the Act, Rules, Regulations, and Guidelines issued under the Act, and other legislations that may impact an individual while acting as Valuation Professional. The above includes the requirements of Code of Conduct prescribed under the Companies (Registered Valuers and Valuation) Rules, 2017 which have been adopted by the RVO ESMA. The Monitoring Committee, wherever necessary, refer the matter to the Disciplinary Committee for appropriate action in case of such Registered Valuer Member who are found to be perennial defaulters. 14. REPORTS TO THE AUTHORITY The Monitoring Committee shall submit a report to the authority in the manner specified by the authority with information collected during inspections. 15. REVIEW OF THE INSPECTION POLICY The implementation of the Inspection Policy will be monitored and reviewed by the Monitoring Committee at half-yearly interval and annually by the Governing Board of RVO ESMA. The Inspection Policy may be amended, if so occasion so arises, from time to time by the Governing Board and will remain in force till further instructions of the Governing Board or by the IBBI.
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