India: Provisions Relating To Registered Valuers Notified!

Last Updated: 17 November 2017
Article by Deepak Jodhani and Harsh Khemka

Most Read Contributor in India, July 2019

Introduction and Background

On 18 October 2017, the Ministry of Corporate Affairs (MCA) notified:

  1. Section 247 of the Companies Act 2013 (Act), which deals with valuation by registered valuers; and
  2. the Companies (Registered Valuers and Valuation) Rules 2017 (Rules).

This is an important development, as Section 247 provides that wherever under the Act, a valuation is required to be conducted in respect of any asset (including property, shares, debentures, securities or goodwill), or net worth of a company or its liabilities, it shall be done by a registered valuer, in the manner prescribed under the Rules.

There are various provisions in the Act, which require valuation by a registered valuer including issuance of shares on preferential basis, compromise and arrangements between company and its creditors or members, minority shareholding buy-out, liquidation, etc. Until Section 247 was notified, valuations could have been conducted by any independent valuer (except in few cases, for instance, issuance of shares on preferential basis, where it was specifically provided that until Section 247 is notified, valuation should be conducted by a SEBI registered merchant banker, or a chartered accountant with at least 10 years' experience).

While Section 247 has been notified, the Rules have not yet been published in the Official Gazette.

Key provisions under the Rules:

  1. Authority: Under the Rules, a designated 'authority' has been made in charge of the registration process, recognition of registered valuer organisations (RVOs) (discussed below), conducting of qualifying examinations, prescribing the appropriate syllabus, entertaining and adjudicating complaints against the valuers or RVOs, etc.  As per the MCA notification dated 23 October 2017, the Insolvency and Bankruptcy Board of India has been designated as the 'authority' under the Rules (Authority). This notification has not yet been published in the Official Gazette.
  2. Asset Classes: The Rules also introduce the concept of an 'asset class', defined as a distinct group of assets, displaying similar characteristics, that can be classified and require separate set of valuers for valuation. As of now, the Rules provide for three asset classes, (i) plant and machinery, (ii) land and building; and (iii) securities and financial assets; however, the Authority has the power to specify other asset classes as well.

It is pertinent to note that: (a) the registration of any valuer shall be for any particular asset class (or multiple asset classes); (b) a valuer registered under any particular asset class shall only be entitled to conduct valuation for that asset class; and (c) the educational qualifications are different for the various asset classes.

  1. Eligibility Criteria: To be eligible for registration, a person must fulfil the following key criteria:
    1. Educational Qualifications and Experience: He should have the minimum educational qualifications and experience required to be registered as a valuer for any asset class, as follows:
      • For 'land and building': (a) Graduation in civil engineering, architecture or town planning plus 5 years' experience in the same discipline after graduation; or (b) post-graduation in the afore-mentioned discipline plus 3 years' experience after post-graduation;
      • For 'plant and machinery': Same as 'land and building' above, except the discipline will be mechanical or electrical engineering instead;
      • For 'securities or financial assets': Graduation in any stream plus membership of the Institute of Chartered Accountants, or the Institute of Cost Accountants of India, or the Institute of Company Secretaries of India, or an MBA/PGDBM specialisation in finance plus 3 years' experience after graduation.

    1. Registered Valuer Organisation: The person should be a member of a RVO.
      • A RVO is an entity recognised by the Authority as such. The following entities are eligible to apply to the Authority to be recognised as a RVO:
        • a company registered as a non-profit company under the Act or Companies Act, 1956;
        • any professional institute established under an act of Parliament to regulate a profession; or
        • a society or a trust, subject to its registration as a company under Section 8 of the Act within a year from the commencement of the Rules.
      • The role of RVO includes:
        • conducting educational courses in valuation and granting membership to qualified persons;
        • laying down a code of conduct and monitoring the functioning of its members; and
        • enforcing a grievance redressal mechanism.

    1. Examination: The person, if he is an individual, should have passed the 'valuation examination' within the preceding three years of making the application for registration. The Authority, either on its own or through a designated agency, may conduct a valuation examination for the various asset classes. The Authority also has the power to recognise an examination conducted by a university as a part of its graduation or post-graduation degree as equivalent to the valuation examination.
    2. Companies and Partnership firms: A company or partnership firm can also be registered as a registered valuer, provided that it meets the following key conditions:
      • it has been set up for rendering professional or financial services and in case of a company is not a subsidiary or associate of another company or body corporate; and
      • all the partners or directors, fulfil the eligibility criteria as set out in this paragraph 3 above (except registration with an RVO).
  1. Valuation Mechanism: The Rules provide that a Committee shall be set up to formulate and to recommend valuation standards and policies. Until such time that the Committee is set up and the valuation standards are prescribed, any internationally accepted valuation standards, or valuation standards adopted by the relevant RVO, can be followed by the registered valuers.
  2. Transition Period: The Rules provide for the status quo to be maintained till 31 March 2018. Hence, persons rendering valuation services can continue doing so without registration under the Rules till the end of the current financial year. Any pre-engaged persons conducting valuations, required under the Act, as of 31 March 2018 will have to complete the same within three months thereafter.


Specialisation: By classifying various asset classes, and laying down different educational qualifications and experience requirements for each asset class, the Rules will result in specialisation of valuation. While accountancy firms / merchant bankers may continue to value securities and financial assets, the role of international property consultants in valuing immovable assets will increase. Also, although not very clear, it appears that a valuer when valuing the shares of a company (holding substantial immovable property, for instance), may be required to engage another valuer registered under 'land and building' asset class to value the immovable property. In such case, vis-à-vis the company, only the first valuer would be liable (and he may choose to have back-to-back indemnity from the second valuer).

Accountability: As the valuers are required to comply with a code of conduct, which includes, (a) conducting the valuation in accordance with the Rules, (b) making an impartial, true and fair valuation; (b) exercising due diligence while performing the functions as valuer; (d) avoiding conflict of interest, etc., a valuer, if he breaches any provisions of the code of conduct, the Rules or Section 247 of the Act, could be subject to monetary penalties in addition to other penal actions from the Authority and/or the relevant RVO. In addition, if the breach is with the intention to defraud the company or its members, he is also liable for imprisonment (up to one year). The above should result in greater transparency and accountability for the valuers.

Standardisation: Once the 'committee' is constituted and the various valuation standards and policies are prescribed, it should bring in much needed standardisation in the conduct of valuations under the Act. That said, it might be difficult to prescribe the specific valuation methodology to be adopted for any particular sector, as each company may have its own intricacies (it could be in growth phase, it could be capital intensive, it could have a large contract, etc.). To that extent, a valuer should have some flexibility to determine the methodology (or a mix of them) best suited for such company. However, it may be helpful to prescribe certain guidance / premises which should be taken into account, for instance, if the valuation should be on a going concern basis, the discount (if any), which should be applied for a minority stake or the company being unlisted, etc.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions