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1993 SNA Update Information - Valuation of equity

Clarification description
Paragraph 13.73 of SNA 93 just says that ''the value of shares that are not quoted on stock exchanges or otherwise regularly traded should be estimated using the prices of quoted shares that are comparable in earnings and dividend history and prospects, adjusting downward, if necessary, to allow for the inferior marketability or liquidity of unquoted shares'', but without making reference to specific issues or methods. The issue is, however, very relevant, as unquoted shares in many countries are far more important than quoted shares. Nonetheless, little progress was formerly made in producing harmonized data on unquoted shares. There are two issues for clarifications to help harmonizing the valuation of equity:
(a) The breakdown of AF5 into quoted shares, unquoted shares and other equity as done in the ESA95;
(b) Recommendation of methods of valuation of different types of equity. This is not a substantive change issue but one that will discuss equity from both the asset and liability side, consider both intercompany and portfolio investment in relation to listed and unlisted equity. Expansion and clarification of equity in the SNA will pave the way for better harmonization with other standards, in particular BPM#5 (which does deal very closely with portfolio and direct investment).
Country comments
Number of country comments for selected clarification:22
  Date postedSourceComment
 11/10/2006ArmeniaThe National Statistical Service of the Republic of Armenia agrees with the most recent AEG recommendations.
 29/09/2006Bank of KoreaWe agree in principle with the recommendations of the AEG for preferring transaction prices to value unquoted equity. However, the other alternatives are required to be ranked.
 25/08/2006Central Bank of EcuadorCon relación al valor de mercado de las acciones, en el caso ecuatoriano, resulta muy complicado establecerlo, pues su mercado de valores es poco desarrollado y en bolsa cotizan un número limitado de compañías. Se ha dado el caso de que algunas compañías nacionales han sido adquiridas por inversionistas extranjeros y el valor que han pagado por la compra de la compañía está muy por encima de lo que registra la compañía en sus balances como acciones. Sería interesante que se amplíe la definición de "acciones y otras participaciones de capital (F5)" a efectos de aclarar si se considera únicamente el capital pagado (acciones) o los otros rubros que forman parte del patrimonio (por ejemplo reservas, aportes para futuras capitalizaciones, utilidades acumuladas), es decir todos los derechos al valor residual de las sociedades, porque ésta sería una alternativa para los casos de empresas que no cotizan en bolsa en países que no tienen mercado de valores desarrollado. Caso contrario, sería interesante conocer métodos alternativos para identificar el valor de las acciones para efectos de construcción de las cuentas nacionales, en donde se maneja un número significativo de sociedades de todo tipo de actividad.
 21/08/2006Central Bank of El Salvador m4cbElSalvadorC9; m4cbElSalvadorC9-english;
 18/08/2006NetherlandsWe generally support the recommendations made at the Frankfurt Meeting of the AEG.
 18/08/2006Bank of England• The meeting report uses the terms quoted/unquoted and listed/unlisted interchangeably but opts for the quoted/unquoted form for SNA headings. We wonder whether the listed/unlisted form is in more common use.
• The meeting report says: “(b) The AEG agreed that transaction prices are the preferred means of valuing unquoted equity.” We remain concerned that reporters will in practice opt to report at historical cost which IFRS permits as an alternative to fair value.
 18/08/2006USAWe agree with the recommendations of the AEG.
 18/08/2006State Bank of PakistanTo value the shares of an unquoted corporation, it is suggested that the valuation should be based on net worth of the corporation and it should be raised by average percentage of dividend paid during the recent last 3 years.
 02/08/2006European Central BankThe ECB generally supports the recommendations made by the AEG.
 01/08/2006Hong Kong, ChinaWe support to split quoted and unquoted shares as a supplementary item. Transaction prices are the preferred means of valuing unquoted equity. For other alternative methods proposed by the AEG, it would be useful if their relative strengths and weaknesses could be indicated, as well as showing a list of preferences.
 01/08/2006National Bank/National Bureau of MoldovaWe back the AEG opinion that the equity should be broken down into additional sub-components and its treatment should be clarified in more detail in the SNA in order to harmonize it with BPM5 and other standards.
 01/08/2006Reserve Bank of South AfricaWe carefully worked through all the issues and would like to give our general support to the recommendations made by the AEG.
 31/07/2006Macao SARStatistics and Census Service of Macao SAR agrees to the AEG recommendations and has no further comments.
 31/07/2006Bosnia and HerzegovinaWe agree with AEG recommendations on the update of the 1993 SNA and do not have any further comments.
 28/07/2006National Bank of SlovakiaConcerning the results of the most recent AEG meeting, we fully support the conclusions and recommendations made by the AEG.
 28/07/2006Bank of PortugalBanco de Portugal would like to express general support for the recommendations made in the Frankfurt meeting of the Advisory Expert Group on National Accounts (AEG).
 28/07/2006Bank of PolandPlease find our general support for the AEG recommendations made during its recent meeting in Frankfurt.
 27/07/2006PolandThe aspect of registration in the System changes of own funds resulting from re-invested earnings is not covered in the current SNA or in ESA 95. It is crucial for comparability reasons to solve this issue and set explicit rules how to record the change of own funds resulting from re-invested earnings.
 27/07/2006Bank of Sierra LeoneWe agree with the recommendations made by the AEG.
 25/07/2006Bank of ItalyWe broadly support the conclusions.
 24/07/2006National Bank of the Republic of AzerbaijanWe have analyzed the “Comment on the recommendations of the most recent Advisory Expert Group on National Accounts (AEG) meeting (January 30 – February 8, 2006) in Frankfurt” within the scope of our responsibilities and I am pleased to inform you that we are in agreement with the AEG recommendations.
 13/12/2005CanadaCanada believes more clarity is needed on this issue and looks forward to the discussion of the Task Force report at the next AEG.
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