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Strategic Performance Management and Business Valuation · Fundamentals of Business Valuation

Valuation Professionals, Ethics and Regulatory Framework for Registered Valuers

Updated 11 October 2026 · Fact-checked

Where the Companies Act 2013 requires a valuation, for example on a preferential allotment by an unlisted company (section 62) or a scheme (sections 230-232), a registered valuer, enrolled with a registered valuers organisation, must do it. Section 247 governs the valuer's appointment and duties. Answer by naming who values, the asset class, the standards followed and the ethical duties.

Understand Valuation Professionals, Ethics and Regulatory Framework

Valuation affects real money: share issue prices, mergers, asset sales and insolvency outcomes. So the law does not leave it to anyone who claims skill. For many corporate events, the Companies Act 2013 requires the valuation to be done by a registered valuer.

A registered valuer is a person (or a firm or company, for the entity route) who has the required qualification and experience, passes the valuation examination, is enrolled with a registered valuers organisation (RVO), and is registered with the authority designated by the Government. Registration is for a specific asset class, such as land and building, plant and machinery, or securities or financial assets. A valuer registered for one class should not value another.

The Rules also set out a code of conduct. Core ideas: integrity, independence, objectivity, professional competence, confidentiality and fair fees. The valuer must disclose any interest or conflict, must not accept an assignment where independence is compromised, and must keep records of the work. A valuer must also not undertake valuation of an asset in which they have a direct or indirect interest.

Beyond the law, valuers follow valuation standards. ICMAI Valuation Standards and the standards of other professional bodies guide concepts such as bases of value, the valuation process, documentation and reporting. The Rules also recognise valuation standards notified by the Government. If no notified standard applies, a valuer follows the standards of the relevant professional body.

For the exam, think in layers: who may value, what they must follow, how they must behave and what happens if they fail. Always link your answer to the case facts given.

Key rules to remember

Who values under the Companies Act
Valuation event under the Act (e.g. section 62 preferential allotment by an unlisted company, section 192, sections 230-232) → registered valuer (registered for the asset class) → appointed as section 247 provides
Section 247 is not a valuation event. It governs the appointment, qualifications and duties of the valuer: where the Act requires a valuation, the audit committee, or the Board if there is none, appoints the registered valuer. The events that need a valuation sit in other provisions. For example, under section 62(1)(c) read with Rule 13 of the Companies (Share Capital and Debentures) Rules, a valuation report from a registered valuer is required for a preferential allotment of shares by a company that is not listed. A listed company prices its preferential issue under SEBI ICDR. In a scheme under sections 230-232 the Tribunal can direct a valuation. Check the provision for the event in the question.
Registered valuer route
Qualification + experience + valuation exam → enrolment with RVO → registration with the designated authority
Registration is asset-class specific. Do not state exact years of experience unless you are sure of them.
Core ethical principles
Integrity, independence, objectivity, competence, confidentiality, disclosure of interest
Use these as headings in any code-of-conduct answer.
Standards hierarchy
Notified valuation standards → (if none) standards of professional bodies such as ICMAI
Say the valuer must state the standard followed in the report.

How to solve Valuation Professionals, Ethics and Regulatory Framework questions

Use this method for any question on valuers, ethics or regulation. It keeps the answer structured and tied to the case.

  1. 1Identify the event in the question: share issue, merger, sale of assets, insolvency or other.
  2. 2Decide whether the law requires a registered valuer for it, and who appoints the valuer.
  3. 3Check the asset class and whether the valuer is registered for that class.
  4. 4Test independence: look for any interest, relationship, fee dependence or conflict in the facts.
  5. 5Name the standards the valuer must follow and the need for a documented report.
  6. 6Match each fact to a code-of-conduct principle, and say which is breached or met.
  7. 7State the consequence or advice in one clear closing line.

Quickest way: Five-Check Scan for Valuer Questions

When to use it: Use for MCQs and short case questions where time is under two minutes.

  1. Check 1: Is a registered valuer needed for this event?
  2. Check 2: Is the valuer registered for this asset class?
  3. Check 3: Is the valuer independent, with no interest or conflict?
  4. Check 4: Were valuation standards followed and the report documented?
  5. Check 5: Pick the option that fixes the failed check; reject options that overstate the rule.

Common mistakes in Valuation Professionals, Ethics and Regulatory Framework

  • Saying any chartered or cost accountant can sign a statutory valuation.

    Students assume professional membership equals authority.

    Fix: State that the valuer must be registered and enrolled with an RVO, not just hold a qualification.

  • Ignoring the asset class of registration.

    Registration is remembered as one general licence.

    Fix: Write that registration is by asset class and match it to the asset in the case.

  • Treating ICMAI standards as the only standards.

    The paper is ICMAI's, so students narrow the framework.

    Fix: Say notified standards apply first; professional body standards such as ICMAI's apply where none are notified.

  • Listing ethics as a vague word list without applying it.

    Students memorise principles but not their use.

    Fix: Tie each principle to a fact, for example fee linked to a higher valuation breaches objectivity.

  • Quoting section numbers or time limits from memory without certainty.

    Pressure to look precise.

    Fix: Use only numbers you are sure of. A correct plain-words rule scores better than a wrong figure.

Worked examples

Example 1

Sunrise Components Ltd, an unlisted company, plans a preferential allotment of shares and proposes to appoint a registered valuer for plant and machinery, who is a relative of its statutory auditor, to value the equity shares. Comment on the appointment.

Show the solution
  1. Event: a preferential allotment of shares by an unlisted company. The Companies Act requires a valuation report from a registered valuer for such an issue. (This requirement applies because the company is unlisted; a listed company would price the issue under SEBI ICDR.)
  2. Asset class: the unit being valued is securities (equity shares). The valuer is registered only for plant and machinery.
  3. Conclusion on competence: the valuer is not registered for the right asset class and cannot do this valuation. This is the main defect.
  4. Independence: the valuer is a relative of the statutory auditor. This raises a serious independence concern under the code of conduct. If the relationship amounts to an interest or conflict, the valuer should not accept the assignment.
  5. Advice: appoint an independent valuer registered for securities or financial assets, appointed as section 247 provides (by the audit committee, or the Board if there is none), with no interest in the company or its auditor.

Answer: The appointment is improper. The valuer is not registered for securities, and the relationship with the statutory auditor raises a serious independence concern; if it amounts to an interest or conflict, the valuer should not accept the assignment. Appoint an independent valuer registered for securities or financial assets, appointed by the audit committee or the Board.

Example 2

A registered valuer is offered a fee of 2% of the final valuation by the promoters of Kaveri Foods Ltd, which is selling a division. Is the arrangement acceptable? Which principles apply?

Show the solution
  1. Identify the feature: the fee depends on the valuation outcome, so a higher value gives the valuer a higher fee.
  2. Apply objectivity: the valuer has a personal reason to push the value up, so the opinion may be biased.
  3. Apply independence: a financial interest in the result compromises independence.
  4. Link to the code of conduct: the valuer should charge a fair fee that does not depend on the value reached and should avoid conflicts.
  5. Recommend: agree a fixed fee or a time-based fee before starting, and record it in the engagement terms.

Answer: Not acceptable. An outcome-linked fee breaches objectivity and independence. The valuer should insist on a fixed or time-based fee agreed in advance.

Exam tips

  • Write answers in the order: who, which asset class, which standard, which ethical principle, conclusion.
  • In case-scenario MCQs, look for hidden facts: relative of auditor, wrong asset class, contingent fee.
  • Avoid giving section numbers or experience years unless you are certain.
  • Use the exact terms registered valuer, RVO, asset class and code of conduct; they signal command of the framework.
  • End each descriptive answer with a clear recommendation, not just a list of rules.

Practice questions from Fundamentals of Business Valuation

Valuation Professionals, Ethics and Regulatory Framework in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Valuation Professionals, Ethics and Regulatory Framework: frequently asked questions

Who can be a registered valuer in India?

A person who meets the prescribed qualification and experience, passes the valuation examination, and is enrolled with a registered valuers organisation and registered with the designated authority. Registration is given for a specific asset class.

What is the code of conduct for registered valuers?

It requires integrity, independence, objectivity, competence, confidentiality and fair dealing. The valuer must disclose any interest, avoid conflicts and keep proper records of the valuation.

Are ICMAI valuation standards mandatory?

Where valuation standards are notified under the Rules, they apply first. Where none are notified, a valuer follows the standards of the relevant professional body, which can include ICMAI. Always state which standard you followed.

Who appoints the registered valuer under the Companies Act?

Section 247 governs the valuer's appointment, qualifications and duties. Where the Act requires a valuation, the audit committee appoints the valuer, or the Board if the company has no audit committee. The events that need a valuation are in other provisions. For example, under section 62(1)(c) the company obtains the valuation report, and the Tribunal can direct a valuation in a scheme under sections 230-232. Check the provision for the event in the question.