Role of a Registered Valuer under Companies Act 2013: A Key Pillar in Fair Valuation

Transparency, accountability, and accurate financial reporting are indispensable for sustainable corporate governance. One critical component that enables these objectives isfair valuationa process that determines the unbiased and objective value of assets, liabilities, or enterprises. At the heart of this process lies theRegistered Valuer, a professional whose role has been formalized under theCompanies Act 2013.

As an established valuation firm,Corporate Valuationsrecognizes the significance of registered valuers in bringing credibility and consistency to corporate financial disclosures. In this article, we explore the origin, evolution, and key responsibilities of aregistered valuer under the Companies Act, 2013, and their pivotal role in ensuring fair valuation.

1. Understanding the Need for Registered Valuers

Prior to 2013, India lacked a standardized regulatory framework for valuation practices, leading to inconsistencies and potential biases in valuation reports. The absence of clear guidelines often resulted in inflated or deflated asset values, undermining investor confidence and corporate decision-making.

To address these gaps, theCompanies Act, 2013introduced a formal structure for valuation professionals. Section 247 of the Act laid the foundation for appointingRegistered Valuers, ensuring that valuations are conducted with competence, independence, and adherence to recognized valuation standards.

2. Legal Framework under the Companies Act, 2013

Section 247 of the Companies Act, 2013 (read with the Companies (Registered Valuers and Valuation) Rules, 2017) mandates that valuations required under the Act or any rules made thereunder shall be conducted by aRegistered Valuer, who must be registered with theInsolvency and Bankruptcy Board of India (IBBI).

Some key highlights of Section 247 include:

• A Registered Valuer must be appointed by the audit committee or the Board of Directors.
• The valuer must have adequate qualifications and experience.
• The valuer must be independent and not related to the company or its directors/officers.
• Penalties are applicable for contravention, including fines and imprisonment.

3. When is a Registered Valuer Required?

A Registered Valuer is mandated in several corporate actions, including:

• Mergers and Amalgamations: For determining the fair share exchange ratio and valuation of assets.
• Issue of Shares: For determining the fair value during preferential allotments or rights issues.
• Acquisitions and Takeovers: To assess fair price for stake sale or business transfer.
• Slump Sale or Asset Sale: To evaluate the true worth of business undertakings.
• ESOPs and Sweat Equity: To assess the fair market value of shares being allotted to employees/directors.
• Buyback of Shares: To determine buyback price and ensure compliance with SEBI and Companies Act requirements.

AtCorporate Valuations, we ensure each valuation meets the rigorous standards required by law and provides clear, defensible conclusions.

4. Who Can Become a Registered Valuer?

To become a Registered Valuer, an individual must:

• Be a member of aRegistered Valuer Organization (RVO).
• Possess prescribed qualifications and experience in the specific asset class (land & building, securities & financial assets, or plant & machinery).
• Complete a 50-hour mandatory training course conducted by an RVO.
• Clear theValuation Examinationconducted by IBBI.
• Apply for registration with IBBI and comply with the Code of Conduct.

Corporate Valuationsmaintains a team of certified and experienced Registered Valuers, who bring domain expertise and regulatory compliance to every engagement.

5. Responsibilities and Ethical Obligations

A Registered Valuer is not just a technical expert but a fiduciary who upholds the integrity of the valuation process. Their responsibilities include:

• Objectivity and Independence: No conflict of interest should influence the valuers judgment.
• Confidentiality: All client information must be kept confidential.
• Compliance: Follow the Valuation Standards notified by IBBI and other applicable regulations.
• Documentation: Maintain working papers and evidences used in arriving at the valuation.
• Transparency: Provide detailed reasoning, assumptions, and methodologies in the valuation report.

The professional ethics of valuers are governed by theValuers Code of Conduct, which enforces accountability and quality in valuation practice.

6. Challenges Faced by Registered Valuers

Despite the robust framework, valuers often face practical challenges:

• Availability of Data: Lack of reliable financial data can affect accuracy.
• Volatile Market Conditions: Rapid changes in economic or sectoral factors can impact valuation assumptions.
• Stakeholder Pressure: There may be implicit pressure to meet certain expectations in transactions.
• Interpretation of Standards: Applying valuation standards uniformly across different asset classes can be complex.

AtCorporate Valuations, we address these challenges by leveraging data analytics, market research, and industry insights, ensuring our reports stand the test of scrutiny.

7. The Role of Corporate Valuations in Fair Valuation

As a trusted name in the valuation space,Corporate Valuationsspecializes in delivering high-quality, compliant, and defensible valuation reports. We provide valuation services across the following verticals:

• Securities and Financial Assets
• Intangible Assets and Intellectual Property
• Real Estate and Infrastructure Assets
• Plant and Machinery Valuation

Our multidisciplinary team of Chartered Accountants, CFAs, Engineers, and Certified Valuers collaborates to ensure that every valuation is aligned with the regulatory framework and business realities.

We also assist clients in preparing for due diligence, supporting them in M&A transactions, dispute resolution, fundraising, and regulatory submissions.

8. Future Outlook and Evolving Landscape

The valuation profession in India is witnessing increased formalization and technological integration. Regulatory bodies such as IBBI are continuously refining standards to ensure global alignment and better investor protection.

Key trends include:

• Digital Valuation Models: Increased use of AI, automation, and big data in asset valuation.
• Specialized Valuations: Rising need for valuation of startups, ESG impact, and crypto-assets.
• Global Best Practices: Greater adoption of international valuation standards (IVS).

For companies navigating complex corporate actions, engaging a reputed and experienced Registered Valuer is no longer optionalits a strategic necessity.

Why Choose Corporate Valuations?

• Expertise: Over two decades of experience in financial modeling and fair valuation services.
• Compliance: Fully aligned with Companies Act, SEBI, RBI, and IBBI guidelines.
• Independence: Objective and conflict-free valuation services.
• Customization: Tailored reports based on industry, asset class, and transaction type.
• End-to-End Support: From documentation to stakeholder presentations, we guide you at every step.

Conclusion

TheRegistered Valueris a cornerstone of corporate governance under the Companies Act, 2013, ensuring transparency and objectivity in asset and enterprise valuation. As companies continue to grow and engage in complex financial transactions, the demand for fair and defensible valuation will only intensify.

Corporate Valuationsstands ready to meet this demand with precision, integrity, and industry insightdelivering value that goes beyond numbers.