Valuation Insights Asia, Third Quarter 2016

Welcome to the first issue of Valuation Insights Asia. This quarterly e-newsletter provides you with the latest trends and changes in valuation and accounting that could affect your business transactions in Asia. 

In this inaugural issue, we discuss potential business implications of BREXIT, the business and accounting impacts of the new PRC Valuation Law and changes to transfer pricing documentation requirements for cross-border transactions. We will also look at the key findings from two Duff & Phelps reports: Transaction Trail, which examines Southeast Asia M&A trends in the first half of 2016 and the annual Indian Premier League Brand Value Report.

To read more about these topics, please click on the links below:

Global

• Special Focus on Business Implications of BREXIT 

China

• Newly released PRC Assets Valuation Law – what you need to know
• Changes to Transfer Pricing Documentation for cross-border transactions

India

• Indian Premier League Brand Value Report

Singapore

• Transaction Trail H1 2016 – Latest Southeast Asia M&A Trends
• Duff & Phelps is now a member of IVAS Council

Special Focus on Business Implications of BREXIT
Following the referendum vote in June in which Britain decided to leave the European Union, there remain many uncertainties for companies, funds, investors and others that will be directly impacted. Businesses in Asia that have operations or investments in the UK will be directly impacted, while others may be impacted indirectly through ripple effects on the global economy.

This issue of Valuation Insights covered an array of topics including economic considerations, compliance and regulatory matters, calculating cost of capital, post-Brexit impacts on transfer pricing, evaluating strategic alternatives in uncertain market environments and what lies ahead for the financial services industry.

Newly released PRC Assets Valuation Law
In July, the National People’s Congress (NPC) approved the People’s Republic of China (PRC) Assets Valuation Law (Valuation Law) after 4 reviews in 10 years. The Valuation Law will be effective starting on 1 December 2016. The release of the Valuation Law formally recognizes the importance of valuation as a specific industry in the capital markets.  The Valuation Law emphasizes the responsibility of the valuer, or professional who performs the valuation, and clarifies that valuation must be performed by a licensed valuation firm in China. Below are some key points of the Valuation Law:

• As before, statutory valuation reports can only be signed by a Chinese Certified Valuer who is employed by a Chinese valuation firm, and registered with the related valuation association.
• The valuation emphasizes the procedure and due diligence of valuation in terms of authentication of the information collected, site inspection, methods selection and retention of records, etc.
• Non-statutory reports can be performed and signed by valuation professionals who have the capability and knowledge, but the professional shall work with a valuation firm. However, an explanation will be needed to clarify the definition of valuation professional.
• The Valuation Law not only regulates the valuation professional and valuation firm, but also the entity or individual who needs the services in terms of selection of the appropriate valuation firm and the liability of providing actual information and data etc.

The full copy of the Valuation Law can be found on the State Council website. If you want to know more about how the Valuation Law may affect your potential share or assets transaction, please contact one of our professionals. Duff & Phelps provides valuation services to our clients for their statutory purposes in China via our local affiliated firm, DP International Appraisal Limited.

Changes to Transfer Pricing Documentation for Cross-Border Transactions
The China State Administration of Taxation (SAT) has released the Bulletin 42 on 13 July 2016 which outlines the changes to the transfer pricing documentation requirements under Circular 2, replacing the current transfer pricing documentation and the inter-company transaction reporting requirements. This change also introduces the recommendations under Action Plan 13 of the Base Erosion and Profit Shifting (BEPS) Project and its impact on taxpayers.

This change will impact multi-national corporations that have cross-border, related-party transactions. The new documentation requirement shall be adopted for related-party transactions which occurred in or after 2016. There are a number of changes to the requirements and clients are advised to consult with one of our professionals to better understand the impacts.

Indian Premier League Brand Value Report
The third edition of our annual study of brand values in the Indian Premier League (IPL) was released in July 2016. The report ranks the franchise brand values of six IPL teams assessing their royalty value and six other factors, including management strength and on-field performance; marketing strategy; celebrity influence and marquee players; geographical location; governance and transparency; and social media engagement.

Transaction Trail H1 2016 – Latest Southeast Asia M&A Trends
In July, Duff & Phelps released the Transaction Trail report for the first half of 2016. This is the fifth year since the report was first published. The report covers M&A, private equity/venture capital investments and initial public offerings in Singapore, Malaysia and Indonesia for the January to June 2016 period.

Duff & Phelps is now a member of IVAS Council
Duff & Phelps is proud to announce its association with the Institute of Valuers and Appraisers of Singapore (IVAS). The Centre of Excellence (CoEx) Council under the Singapore Accountancy Commission appointed Ms. Srividya Gopalakrishnan, Managing Director, Duff & Phelps Singapore as member of the IVAS Council.

Established under the umbrella of the Singapore Accountancy Commission, the IVAS seeks to broaden the talent pool, deepen the expertise of business valuers, uphold public trust in the role they perform and enhance the reputation of the business valuation profession in Singapore. Duff & Phelps will work closely with IVAS and its network of industry partners on areas such as curriculum and assessment development, research and thought leadership.