The Companies Act, 2013 (Act) had brought the concept of Registered Valuers to regulate the practice of Valuation in India and to standardize the valuation in line with International standards. However the valuer’s qualification, experience, manner and process was left to be decided by the Rules.

The Ministry of Corporate Affairs (MCA) has now issued the Companies (Registered Valuers and Valuation) Rules, 2017 (Rules) on 18th October, 2017. Simultaneously, section 247 of the Act has now come into force w.e.f. 18th October 2017.

The Registered Valuer under Companies Act, 2013 shall specifically do valuation of asset classes (Land and Building, Plant and Machinery and Securities and Financials Assets) as required under the Act. However it is also clarified under the rules that the Registered Valuer provisions shall not automatically become applicable to valuation required under any other law (like RBI, Income Tax, SEBI etc).

Accordingly, as of now, the Registered Valuer provisions shall cover the following Acts/Regulations - Companies Act, 2013, Insolvency Code, 2016 and SEBI (REIT and InvIT) Regulations, 2016. However in times to come it is expected that other Regulators would also align their Act/Rules with these Registered Valuer provisions. The Registered Valuer shall be appointed by the audit committee or in its absence by the Board of Directors of that company.

Companies (Registered Valuers and Valuation) Rules, 2017 contain various aspects pertaining to Registered Valuers including:

• Who can become Valuer (including Qualification, experience and clearance of Valuation examination) for each Asset Class and the process involved;
• Eligibility and Role of Registered Valuers Organisation (RVO) for conducting educational courses, granting membership, conducting training, laying code of conduct, monitoring the functioning of valuers and addressing grievances including conducting disciplinary proceedings against valuers who are its members;
• The Valuation Standards required to be adhered to while performing and reporting;
• Contents of the Valuation Report including permissible caveats and limitations;
• Professional competence and Due Care and Independence of Valuer;
• Maintenance of record of each assignment for minimum 3 years and
• Regulation of the profession including Model code of conduct for Registered Valuers

Some instances where valuation is mandated under the Companies Act, 2013:

• *For Valuing further Issue of Equity Shares & Convertible Instruments
• For Valuing Assets involved in Arrangement of Non Cash transactions involving Directors
• *For Valuing Shares, Property and Assets of the company under a Scheme of Corporate Debt Restructuring
• *For Valuation including Share swap ratio under a Scheme of Compromise/Arrangement, a copy of Valuation Report by Expert, if any shall be accompanied
• *Where under a Scheme of Compromise/Arrangement the transferor company is a listed company and the transferee company is an unlisted company, for exit opportunity to the shareholders of transferor company, valuation may be required to be made by the Tribunal
• *For Valuing Equity Shares held by Minority Shareholders
• For preparing Valuation report for determination of Liquidation Value of Assets.

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