Ashay Anand
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Ashay Anand

Ashay is a lawyer turned serial entrepreneur with multiple ventures under his belt. He has a Bachelor's degree in Law from Campus Law Centre, Delhi University & a Diploma in Business Laws from NUJS, Kolkata. He is also a cited author, researcher and book reviewer at BookReview Circle.com
Ashay Anand
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This is part-1 of a three part series on “A New Class of Professional Services: Registered Valuers”. The parts are dealt with as separate articles in themselves, so one can read each article separately without having to read the previous article for context but it is recommended that the three be read together for a comprehensive analysis of the topic.

Valuations lie at the core of any business and might be considered as the backbone of financial markets. Correct valuation, does not merely provide a glimpse into the financial health of an enterprise, but is absolutely vital to the efficient working of investors, markets and companies alike. In today’s economic scenario, where retail investors are growing by the day and the start-up buzz is gripping young entrepreneurs and investors, there is a pressing need for independent valuations in almost all major economies. Business or Asset valuation is of critical importance for strategic business decisions like fund raising, mergers and acquisitions, liquidation of businesses, family or shareholder disputes or to comply with certain regulatory or accounting requirements in India under Income Tax, Reserve Bank of India regulations, Income Tax Act, SEBI Laws etc.[1] Better Corporate Governance has also led to the requirement of independent Business Valuations.[2]

Business Valuation & Companies (Registered Valuers and Valuation) Rules, 2017

Business Valuation in India was left unregulated till the necessity for a prescribed set of rules for the same was discussed under the Companies Act, 2013. Valuation in itself is an inexact science, which is still evolving making the professional judgement of valuers critical in any valuation exercise. Hence, lack of a definite set of rules to govern valuation in India and the absence of any regulatory authority to regulate, govern and develop a uniform standard or practice of valuation had led to different valuers taking drastically different stands leading to marked differences in value conclusion. To remedy the above situation, the Companies Act, 2013 mentioned the concept of registered valuers to regulate and standardize the practice of valuation in India. However the valuer’s qualification, experience, manner and process were left to be decided by the rules that were issued by the Ministry of Corporate Affairs (MCA), Govt. of India as Companies (Registered Valuers and Valuation) Rules, 2017 on 18th October, 2017 almost four years after they were provided for under section 247 of the Companies Act, 2013 (Act).[3]

The Ministry of Corporate Affairs (MCA), Govt. of India vide a notification[4] dated October 20th, 2017 brought into effect Section 247 of the Act. The section dealt with valuation by Registered Valuers to standardize the concept of valuation and convert valuers into a class of  professionals. In addition to the above MCA also notified2 of the Companies (Registered Valuers and Valuation) Rules, 2017 (‘Rules’)[5] to elaborate on the provisions of section 247 of the Act.

The Rules contain specific provisions pertaining to the eligibility, qualifications and registration of valuers, recognition of valuation professional organizations (VPO’s), eligibility and role of Registered VPO’s for conducting educational courses, granting membership, training, laying code of conduct, monitoring the functioning of valuers and addressing grievances including disciplinary proceedings against its members, the model code of conduct for registered valuers under Schedule-I, governance structure and model bye-laws for VPO’s including committees, duties of members, disciplinary proceedings, surrender and exclusion of membership.[6] The rules provide the mechanism for valuation standards and also specify the requirements with respect to the content of the valuation report. With the underlying philosophy that correct valuation is critical for an enterprise and all the concerned stakeholders, a valuer shall be required to conduct valuation as per the Rules. The same Rules shall also apply on the valuer if required by another regulatory authority or under any other law.[7] The rules inter alia provider a valuation to be conducted, a valuer (individual, partnership firm or a company) has to be registered with the Registration Authority specified by the Central Government. The Rules provide for registration of different category of valuers and discuss the eligibility for registered valuers, which include the basic requirements, qualifications and experience amongst others. These requirements are essential to qualify as a registered valuer. It is also pertinent to mention that it is not compulsory for an eligible applicant to register as a valuer after passing the valuation examination.

A registered valuer shall carry out valuation in respect to any property, stocks, shares, debentures, securities or goodwill or any other assets or net worth of a company or its liabilities, as per chapter XVII of the Companies Act. The Insolvency and Bankruptcy Board of India is to be the authority with respect to registration, recognition and ancillary matters related to valuers.[8]

The Registered Valuers are also compulsorily required to secure membership from Registered Valuers Organisations (RVOs) in their specific category, which has been duly recognized by the Registration Authority under the Rules. The eligibility for such recognition has also been provided in the Rules including conducting of training and educational courses for valuation of specific asset classes, grievance redressal mechanism, an internal governance structure and provisions for enforcement of a code of conduct on the registered valuers who are members of the specific RVO. To summarize, the Rules lay down a set framework for valuation bringing much desired credibility and uniformity to the system though it is understood that assessment of two valuers may still not be identical since it is largely dependent on the discretion and interpretation of the valuer.

The rules have also provided for a transition period up to March 31st, 2018 for registration of valuers with the authority to fulfill the requirements as mandated by the MCA. As per the rules, a person, partnership firm or a company who may be rendering valuation services under the Act, on the date of commencement of these Rules, may continue to render valuation services without a certificate of registration up till March, 2018.[9]

The Rules specify Insolvency and Bankruptcy Board of India (IBBI) as the authority under the Rules. Vide a relevant notification under section 458 of the Act,[10] the Central Government delegated its powers and functions vested in under Section 247 of the Companies Act, 2013, related to valuation any property, stocks, shares, debentures, securities or goodwill or any other assets by Registered Valuers to the Insolvency and Bankruptcy Board of India.[11]

Though valuation was carried out before the promulgation of these rules, the Rules read with Section 247 of the Companies Act, 2013 brought a set of desired regulations with regard to the conduct and professionalism of valuers. This would also lead to valuation being a specialized profession.[12] Not only did it rectify the issue of the differences in the assumptions taken by different valuers for the purpose of valuation but also standardized the profession of valuation by providing for Registered Valuers and RVOs to train, equip and keep a check on them. The valuations shall now be done in accordance with the International Valuation Standards 2017,[13] which have been issued by International Valuation Standards Council (IVSC) unless Valuation Standards are further notified.

This article was published as part of coursework for the NUJS MA in Business Laws course. Link:  mbl.nujs.edu 


[1] Corporate  Professionals, “Impact Analysis of Companies (Registered Valuers and Valuation) Rules, 2017 ”, October, 24, 2017. Retrieved on 04.01.2018.


[2] ibid

[3] Refer Section 247 of the Companies Act, 2013

[4]  MCA Notification No S.O. 3393(E), [F. No. 1/27/2013-CL-V], dated 18th October, 2017.


[5] Press release, Press Information Bureau, dated 20th October, 2017.


[6] Companies (Registered Valuers and Valuation)Rules, 2017


[7] Press release, Press Information Bureau, dated 20th October, 2017. Available at: http://pib.nic.in/newsite/PrintRelease.aspx?relid=171821

[8] Business Line, Govt notifies rules for registered valuers, PTI, October 20, 2017. Retrieved on 04.01.2018


[9] Rule 11 of Companies (Registered Valuers and Valuation) Rules, 2017.

[10] Press Information Bureau, Ministry of Corporate Affairs, Government of India Press Release Dated October 20, 2017. Retrieved on 04.01.2018

http://pib.nic.in/newsite/PrintRelease.aspx?relid=171821 http://pib.nic.in/newsite/PrintRelease.aspx?relid=171821

[11] MCA Notification no. SO 3401(E) [F.NO.1/27/2013-CL-V (PART-I)], dated 23rd October, 2017 Available at: http://www.mca.gov.in/Ministry/pdf/delegationOfPowers_Section247_24102017.pdf.

[12] Mondaq, India: MCA Notifies Provision And Rules Regarding Registered Valuers And Valuation, S.S. Rana & Co. (Advocates) November 13, 2017. Retrieved on 04.01.2018


[13] Refer https://www.ivsc.org/standards/international-valuation-standards.

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