Valuation Certificate by Registered Valuer

Only Registered Valuer can issue valuation certificate

The Companies Act, 2013 has introduced the concept of Registered Valuer vide Section 247 of the Act which makes it mandatory that where the valuation is required for any stocks, shares, debentures, property, securities and/or goodwill or any other assets or the net worth of a company and/or its liabilities by and under the provisions of the Act, the valuation shall be done by a registered valuer. 

Provisions which require valuation

A brief look at the Act would show that there are a few provisions which mandate valuation through a registered valuer.  Some of them are briefly referred here-under:
·         Section 62(1)(c): Further issue of share capital
·         Section 192(2): Restriction on non-cash transaction involving directors
·         Section 230(2): Scheme for corporate debt restructuring
·         Rule 8 of Companies (Share capital and debentures) Rules, 2014:  Issue of sweat equity: the price shall be determined by a registered valuer.

Valuer under other Acts

Even SEBI regulations and IBC requires valuation by a registered valuer.

Designated Authority for RV

The Central Government has designated the IBBI- Insolvency and Bankruptcy Board of India to be the authority under the Rules.  The IBBI website shows that around Eleven Registered Valuers Organisations have been recognized by it as on 23.04.2019

Who can apply for the Valuation Examination

What is the process to be followed to become a Valuer member?
  1. ·        An individual has to first enroll as a valuer member with Registered Valuers Organisation and complete 50 hours Educational Course conducted by the RVO.

  • ·        On completion of the Course and receiving a certificate of participation, the valuer member has to clear examination conducted by IBBI.
  • ·        After clearing examination, valuer member to enroll with RVO and to make an application to the Authority in Form A of the Annexure II of the Companies (Registered Valuers and Valuation) Rules, 2017.


 Valuation Standards

As per Rule 8 of Companies (Registered Valuers and Valuation) Rules, 2017, the registered valuer shall, while conducting a valuation, comply with the valuation standards as notified or modified under rule 18: 2 Provided that until the valuation standards are notified or modified by the Central Government, a valuer shall make valuations as per-
(a) internationally accepted valuation standards; 
(b) valuation standards adopted by any registered valuers organisation.

The registered valuer has to be appointed by an audit committee and in its absence the Board of directors.