The in-kind shares valuation is critical to estimate their value thereby, a shareholder offering the same can possess proportionate shares of the Company’s capital. In-kind shares valuation can be conducted at the stage of incorporating a company or upon increasing its share capital.
In-kind shares valuation is governed by the provisions set forth in this regard in Module Five, “Securities Activities and Registered Persons” of the Executive Bylaw of the Law No. 7 of 2010 regarding the Establishment of the Capital Markets Authority and Regulation of Securities Activity, as amended, and the Companies Law No. 1 of 2016 and its Executive Regulations, as amended.
What are the in-kind shares?
In-kind share is a type of share that the partners offer when incorporating companies or increasing the share capital, whether in the form of tangible or intangible assets.
What are the statutory and regulatory requirements in the State of Kuwait that mandate companies to have their in-kind shares valuated?
As per Articles 11 and 79 of the Companies Law No. 1 of 2016, and Article 3-1 of Module Eleven “Dealing in Securities” of the Executive Bylaw of the Law No. 7 of 2010 regarding the Establishment of the Capital Markets Authority and Regulation Securities Activity, as amended, companies shall have their in-kind shares valuated by an audit firm licensed by the Capital Markets Authority in the cases that require such valuation.
What are the cases that require in-kind shares valuation?
Companies are required to appoint a licensed asset valuator to carry out the in-kind shares valuation provided that such valuator shall not be the auditor or a partner of the company pursuant to the provisions of the aforementioned Articles. In-kind shares valuation shall be performed if:
- The share capital of the company includes in-kind shares, whether upon incorporation or increasing the capital.
- Upon the request of the issuer or the issuer’s founders or based on a court order to valuate such assets for the purposes of a forced sale and mandatory liquidation.
What is the liability of the asset valuator in this regard?
Article 3-5 of Module Eleven, “Dealing in Securities” of the Executive Bylaw of the Law No. 7 of 2010 regarding the Establishment of the Capital Markets Authority and Regulation Securities Activities, as amended, states that:
“An Asset Valuator shall be liable for any professional negligence or fault relevant to its conclusions to the extent of the information available to it in this regard.”
In light of the above, Baker Tilly adopts effective and efficient valuation techniques to ensure the fair valuation of the underlying assets.
What is the added value to business entities from the in-kind shares’ valuation service?
- Safeguard the shareholders’ rights to share capital.
- Ensure fair valuation of the in-kind shares as the asset valuator is independent of the business entities for which the valuation is conducted.
- Enhance the principles of independence and integrity and prevent conflict of interest while rendering valuation services.
What are the services provided by Baker Tilly Kuwait?
Baker Tilly is CMA-licensed asset valuator to issue asset valuator’s report on in-kind shares valuation.