Professional Documents
Culture Documents
Suruhanjaya Sekuriti
Securities Commission
GUIDELINES ON ASSET VALUATION
Issued By:
Securities Commission
PAGE
Chapter 1 1-1
INTRODUCTION
Chapter 2 2-1
DEFINITIONS
Chapter 3 3-1
APPOINTMENT OF VALUER
Chapter 4 4-1
VALUATION
Chapter 5 5-1
CONTENTS OF VALUATION REPORT
Chapter 6 6-1
VALUATION CERTIFICATE
Chapter 7 7-1
COMPLIANCE AND ENFORCEMENT
Chapter 8 8-1
REVIEW OF VALUATION
Chapter 9 9-1
SUBMISSION OF REPORT
SCHEDULES
Schedule A : Declaration by Valuer SA-1
Schedule B : Valuation Report Checklist SB-1
GUIDANCE NOTES
Guidance Note 1 : Valuation of Plant, Machinery and
Equipment
Guidance Note 2 : Forest Assessment Report
Introduction
1
Chapter 1
INTRODUCTION
1.01 The Guidelines on Asset Valuation has been formulated with the
principal objective of setting out the requirements that must be
complied with by valuers when carrying out valuations of property
assets including plant, machinery and equipment, for the following
purposes:
1.03 The SC may, from time to time, issue guidance notes to promote
clarity and provide guidance in relation to the requirements of the
guidelines and these guidance notes should be complied with in
the same manner as the guidelines. The SC may also vary, amend,
modify, waive or repeal the guidelines or the guidance notes as
the need arises.
1-1
and expeditious consideration of proposals that involve the
valuation of property assets.
1.06 Valuers must also ensure compliance with the valuation standards
issued by the Board of Valuers, Appraisers and Estate Agents,
Malaysia (Board) and other applicable valuation standards issued
by recognised professional bodies.
1.07 With these guidelines and guidance notes, it is hoped that valuers
will exercise professional responsibility and due diligence on which
the SC places great importance.
1-2
2
Definitions
Chapter 2
DEFINITIONS
2.01 In these guidelines, the following words shall construe to carry the
following meanings, unless the context otherwise requires:
2-1
market value shall have the meaning given in Standard
1 of the Malaysian Valuation Standards
issued by the Board.
2-2
3
Appointment of Valuer
Chapter 3
APPOINTMENT OF VALUER
Qualifications of Valuer
Independence of Valuer
(b) where the client company does not have a significant financial
interest in the valuer’s company; and
3-1
(c) where he has no pecuniary or other interests that could
reasonably be regarded as being capable of affecting his ability
to give an unbiased opinion.
Declaration
Conflict of Interest
3.06 Notwithstanding the above, the valuer shall, at all times, take all
reasonable steps to ascertain whether a conflict of interest exists
or is likely to exist in relation to his appointment to provide valuation
services to a client company.
3-2
Valuation of Foreign Property Assets
Professional Duty
3.09 Valuers shall at all times conduct their duty with high standards of
competence, honesty, integrity and professionalism, and shall
maintain the strictest impartiality and objectivity when providing
independent advice.
3-3
Valuation
4
Chapter 4
VALUATION
Bases of Valuation
4.02 Where assumptions are used in the valuation, these shall be clearly
stated. Such assumptions must be realistic, relevant and valid and
are to be adequately substantiated by reference to physical,
functional and market factors. Assumptions that planning
permission, conversion approval and subdivided titles are available
but not materialised at the time of valuation will not be acceptable
except when they form part of the terms and conditions under
the relevant sale and purchase agreement.
Methods of Valuation
4-1
(1) The Comparative Method
; and
4-2
(c) The adjustments made on comparables used to arrive
at the value.
4-3
(4) The Residual Method
4-4
(6) Other Methods
4-5
(c) For the remaining area where the development is not in the
immediate future, other alternative approaches shall be
used.
Disclosure Requirements
4.06 Valuers are required to fully disclose all relevant information which
is relied upon in the course of carrying out any valuation of the
property assets.
4-6
; and
4-7
Contents of Valuation
Report
5
Chapter 5
5.01 A valuation report shall contain, but not be limited to, the following
to ensure the user is adequately and appropriately informed of all
material facts pertaining to the property being valued:
(a) This may be the same date as the date of the report, or
an earlier date but not more than six months from the
date of receipt of the submission.
5-1
(5) Inspection and Referencing
5-2
(b) While the valuer may state the basic details related to
title, tenure, restrictions, conditions, easements, rights
of way etc., copies of the title shall be provided.
Any legal interpretations of any matters in the title which
may have a direct or indirect influence on the value of
the property shall be provided by a member of the legal
profession; and
5-3
(iv) The existence of any recent significant
refurbishment or renovation;
5-4
(xi) For timber concession, details relating to
infrastructure, area statement of the forest
(logged-over and virgin, operable and inoperable),
felling restrictions, merchantable timber stock by
species mix, estimated recoverable volume, past
yields (if applicable), operational costs, statutory
obligations and other significant features such as
distance to base camp/sawmill/port, EIA
requirements, customary rights etc.;
5-5
submitted in conjunction with proposals that involve
valuations of timber concession, quarry/extraction of
minerals and certain specialised properties;
(10) Neighbourhood
(12) Assumptions
5-6
(i) Date of acquisition;
5-7
(c) The sources and nature of information relied upon in
the valuation shall be provided.
5-8
(20) Appendices
(iii) Maps;
(iv) Photographs;
; and
5-9
Valuation
6
Certificate
Chapter 6
VALUATION CERTIFICATE
6.02 The valuation certificate shall be signed and dated. It must contain
clear, accurate and adequate information which is not misleading
to enable investors and their investment advisers to make informed
investment decision.
(i) Addressee;
6-1
(vi) Market value/summary of market value as stated in the
property schedule, where applicable;
6-2
(v) Information specific to the type of property such
as timber concessions, hotels, golf courses, etc.;
• Licences/permits;
• Land/building leases;
; and
6-3
(c) Market value
6-4
Compliance and
Enforcement
7
Chapter 7
7.01 It shall be the duty of the valuers to ensure that all the requirements
set out in these guidelines and guidance notes are fully complied
with. The valuer shall also ensure compliance with other relevant
guidelines/guidance notes issued by the SC and applicable valuation
standards. In instances of non-compliance with these guidelines,
the SC may take appropriate action against the valuer concerned
after seeking an explanation for non-compliance and deviation.
Types of Non-compliance
7-1
(h) Omission of factual and material information such as
contravention of statutory requirements, legal and financial
obligations, and detrimental factors; and
Penalties
7.03 The SC reserves the right to impose penalty(ies) on the valuer who
fails to comply with any of the requirements in these guidelines as
is permitted under section 158 of the Securities Commission Act
1993. The types of penalties that the SC may impose are dependent
on the severity of the transgressions.
7-2
Review of
Valuation
8
Chapter 8
REVIEW OF VALUATION
Second Opinion
8.02 The SC reserves the right to seek a second opinion on the valuation
of properties or any other experts’ reports. The second-opinion
valuer shall be appointed by the SC. Any fees and costs incurred
shall be borne by the company.
8-1
Submission
of Report
9
Chapter 9
SUBMISSION OF REPORT
9.02 For proposals under paragraph 5.06 of the Issues Guidelines, the
relevant valuation reports shall be submitted to the SC by the adviser
prior to the submission of the corporate proposal, for purposes of
expediency. The valuation reports shall be submitted not more than
one month but at least two weeks before the submission of the
corporate prosposal.
9.03 Two copies of the valuation reports shall be submitted to the SC.
9-1
Schedules
SCHEDULE A
DECLARATION BY VALUER
I,….....…...…(1)..…...……….…from.......…...…(2)…...….………(the Firm)
instructed by……………….….......(3)……..........………….(the Company)
to carry out a valuation on….....…...........(4)…............…….…(the Subject
Property[ies]) do hereby declare that–
(ii) the partners or directors of the Firm are neither the directors
nor employees of the Company and they do not have any
interest, direct or indirect, in the Company;
(iii) the Company does not have any interest, direct or indirect,
in the Firm; and
Declared by
..........................................
Name:
Designation:
Registration number:
Date:
Notes
(1) Name of private valuer.
(2) Name of Firm.
(3) Name of Company.
(4) Identification of the property(ies).
SA-1
SCHEDULE B
Part I
Applicant company (*) : …………………………………………...
Type of proposal : ……………………………………………
Tentative date of submission
of corporate proposal : ……………………………………………
Date of valuation is less
than six months from the
above date : Yes/No
Contact person (HQ) : ……………………………………………
Address : ……………………………………………
…………………………………………...
Telephone : ……………………………………………
Contact person (site) : ……………………………………………
Telephone : ……………………………………………
Adviser : ……………………………………………
Contact person : ……………………………………………
Telephone : ……………………………………………
Part II
Valuation firm : ……………………………………………
Valuer : ……………………………………………
Telephone : ……………………………………………
Details of property
• Type of property : ……………………………………………
• Address : ……………………………………………
• Lot no. : ……………………………………………
• State : ……………………………………………
• Market value : ……………………………………………
• Date of valuation : ……………………………………………
2 Purpose of valuation:
i. Report prepared specifically
for submission to the SC
ii. Type of corporate proposal
3 Interest to be valued:
i. Legal interest to be valued
Property Description
5 Title particulars:
i. Title search conducted
ii. Basic details of title
iii. Where titles have yet to be issued
or interests to be valued involve
licences/permits/leases/joint
ventures, the following are provided:
• Relevant certified document(s)
ascertaining the legal interest
• Disclosure of relevant details
of the above document(s)
SB-2
Property Description
No. Disclosure Requirements Under On Comments
Item Page
No.
SB-3
Valuation
No. Disclosure Requirements Under On Comments
Item Page
No.
10 Basis of valuation
Attachments
SB-4
Attachments
No. Disclosure Requirements Under On Comments
Item Page
No.
21 Original photographs
22 Declaration by valuer
SB-5
Guidance Note 1
VALUATION OF PLANT,
MACHINERY AND EQUIPMENT
Guidance Note 1
CONTENTS
PAGE
2.0 INTRODUCTION
2.02 This guidance note is intended to assist all parties involved, either
directly or indirectly, to understand the basis upon which valuations
of PME are undertaken. It also sets out the nature and extent of
information that must be included in the valuation reports of PME
submitted to the SC for approval.
2.03 Valuers are required to ensure compliance with the relevant and
applicable standards issued by the Board of Valuers, Appraisers
and Estate Agents, Malaysia, the International Valuation Standards
Committee and other recognised professional bodies.
GN1-1
Committee which include tangible assets other than realty intended
to generate income for their owner.
4.01 The basis of valuation is generally market value. Like other tangible
assets, when there is no evidence of market value due to the
specialised nature of the PME, the depreciated replacement cost
(DRC) basis may be used.
Market Value
4.02 In determining the market value of PME, the valuer must clearly
qualify the circumstances in which the basis of valuation is made,
for instance–
GN1-2
(a) Whether there is time limit on the removal, for example due
to an expiry of a lease on the land/buildings; and
5.01 The valuer shall use the appropriate methods of valuation with
adequate substantiation, and adhere to the relevant valuation
standards issued by the Board and other applicable valuation
standards recognised by professional bodies. When applying the
appropriate methods of valuation, the valuer shall ensure the
following details are provided:
(iii) Model;
GN1-3
(iv) Age;
(v) Specifications;
; and
GN1-4
(e) Source of information.
6.01 The valuation report conducted on PME, shall contain, but not be
limited to the following:
(a) This may be the same date as the date of the report, or
an earlier date but no more than six months from the
date of receipt of the submission.
GN1-5
(b) An inventory, which shall include all the relevant details
of the PME, as certified by the client must be provided;
and
(c) Where PME is/are on lease, the valuer shall exclude such
item(s).
(i) Address/locality;
(iii) Mukim;
; and
GN1-6
(7) Description of Plant, Machinery and Equipment
GN1-7
(10) Method of Valuation
(12) Valuation
GN1-8
(x) Specifications and/or dimensions (whichever is
applicable);
; and
GN1-9
(b) Relevant factors affecting marketability of the PME,
including general factors which may currently or in the
foreseeable future, have an adverse impact on the
market value shall also be highlighted in the report.
(b) The valuer shall also state whether allowance has been
made in respect of existing or proposed local legislation
relating to taxation on the realisation of such asset.
(17) Appendices
GN1-10
(iv) Photographs of PME;
; and
GN1-11
Guidance Note 2
Guidance Note 2
PAGE
2.0 INTRODUCTION
2.01 This guidance note sets out the requirements which must be
adhered to in the preparation of a Forest Assessment Report (FAR).
2.03 The FAR shall be submitted to the SC in two copies and dated not
more than one year from the date of receipt of the related
submission by the SC.
Qualifications of Forester
GN2-1
(c) Has the experience in carrying out a forest inventory; and
Independence of Forester
(b) where the client company does not have a significant financial
interest in the forester’s company; and
Declaration
Conflict of Interest
GN2-2
3.05 Notwithstanding the above, the forester shall, at all times, take all
reasonable steps to ascertain whether a conflict of interest exists
or is likely to exist in relation to his appointment to provide forest
assessment services to a client company.
3.06 Full disclosure shall be made in the relevant FAR or any related
document where any of the following situations exists:
3.07 Where the property asset is located overseas, the FAR shall be
prepared by a qualified forester registered in Malaysia. A joint
forester recognised internationally or professionally in the country
where the forest is located may be engaged, if necessary.
4.0 OBJECTIVES
GN2-3
(c) in the case of plantation forests, to describe the plantation
forest in terms of areas planted/to be planted; feasibility of
the plantation forest project, silviculture history etc.; and
5.01 The FAR shall contain, but not be limited to the following:
(a) The FAR must state the client and nature of the
instructions.
(2) Purpose
(4) Location
GN2-4
(5) Description of the Forest
(ii) Topography;
GN2-5
(vi) Other significant features
• Silviculture history;
; and
GN2-6
(b) The tree size to be inventoried must conform to the
minimum cutting limit of the relevant authority and as
defined in the timber licence agreement/document
unless otherwise superseded by other official or legal
documents;
GN2-7
(iv) Ground survey
(9) Appendices
GN2-8
(ii) Satellite imagery or aerial photographs (in both soft
and hard copies);
(iii) Maps:
6.0 PENALTIES
GN2-9
SCHEDULE A
DECLARATION BY FORESTER
I,….....…...………(1)..…...……….…from.......…...……(2)…...….…………(the
Firm) instructed by……………….….........(3)……..........……………(the
Company) to carry out a forest assessment report
on….....….................(4)…............…….……..(the Subject Property[ies])
do hereby declare that–
(ii) the partners or directors of the Firm are neither the directors
nor employees of the Company and they do not have any
interest, direct or indirect, in the Company;
(iii) the Company does not have any interest, direct or indirect,
in the Firm; and
Declared by
..........................................
Name:
Designation:
Registration number:
Date:
Notes
(1) Name of forester.
(2) Name of Firm.
(3) Name of Company.
(4) Identification of the property assets.
SAGN2-1
Securities Commission 3 Persiaran Bukit Kiara Bukit Kiara 50490 Kuala Lumpur Malaysia Tel: 603-6204 8000 Fax: 603-6201 1818
websites: www.sc.com.my www.min.com.my