Singapore looking to launch guidelines for the valuation of intangible assets

SINGAPORE may soon launch new guidelines to value intangible assets (IA) such as trademarks and patents to plug gaps in existing IA valuation practice. 

The Intellectual Property Office of Singapore (IPOS) is seeking a contractor to propose an outline for new IA valuation guidelines, after identifying issues with existing practices, according to tender documents on the government portal, Gebiz. 

Intangible assets are non-physical assets such as brands, software codes and forms of intellectual property (IP) such as patents and trademarks. 

“Intangible assets (IA) have become increasingly critical to businesses’ value, and by some estimates represent over half of global enterprise value. However, IA valuation practices are still non-uniform within and across economies,” the statutory board added. 

The outline will facilitate drafting IA valuation guidelines “in the next, separate phase of work”, the tender documents stated. 

The documents added that the valuation guidelines that contractors propose must, among other things, build upon standards from the International Valuation Standards Council and be interoperable in various jurisdictions including Canada, the UK and the US. 

The contractor will also need to conduct both “desktop research” and interviews with lenders, investors such as private equity firms, intellectual property legal practitioners and valuation practitioners to identify issues in existing valuation practices. 

While various IA valuation standards and guidelines issued by various organisations currently exist, they can differ in scope, depth, objective and the extent to which they are binding on users and providers, leaving “room to improve the consistency of IA valuation practices in the industry”. 

“There is value in developing IA valuation guidelines based on the International Valuation Standards that can be widely adopted internationally,” IPOS said in the tender documents. 

The government has previously hinted that IA valuation guidelines might be in the pipeline, as such assets become increasingly important to businesses in today’s digital economy. 

In December last year, the Accounting and Corporate Regulatory Authority and IPOS launched a public consultation seeking public feedback on a new framework to help companies disclose and communicate their IAs. 

“The proposed Intangibles Disclosure Framework can also serve as a precursor or base for subsequent development of valuation guidelines for intangibles,” the public consultation documents stated. 

“Globally, the intangible asset valuation and reporting remain at a nascent stage currently. No jurisdiction has developed an intangible-specific disclosure framework, let alone an intangible-specific valuation framework,” the documents added. 

This comes more than two years after the Singapore Intellectual Property Strategy 2030 roadmap, a 10-year blueprint that aims to build up the existing ecosystem for IP and IA services here, was launched in April 2021. 

Among the goals outlined in the blueprint was the building of a credible and trusted IP and IA valuation ecosystem through, among other things, the development of IP and IA valuation and disclosure guidelines. 

The blueprint announced that Singapore will spearhead an international IP and IA panel that will develop “valuation guidelines based on international valuation standards that can be widely adopted internationally”, given that there was no commonly accepted IA and IP valuation practice by the industry. 

It added then that it will build a pipeline of accredited IP and IA valuers to complement its work on developing IP and IA guidelines.