Strategic Performance Management and Business Valuation · Laws and Compliance in Business Valuation

Section 247 Companies Act and Registered Valuers Rules

Updated 11 October 2026 · Fact-checked

Section 247 of the Companies Act, 2013 says that where the Act requires a valuation of property, stock, shares, debentures, securities or goodwill, it must be done by a registered valuer appointed by the audit committee or the Board. The Registered Valuers Rules, 2017 set who can register, the duties of the valuer and the process. Answer by stating the rule, then applying it to the case.

Understand Companies Act 2013 and Registered Valuers Rules

A valuation can move real money. It decides the price at which shares are issued, the exchange ratio in a merger, or the value of assets in a restructuring. If anyone could sign a valuation report, the numbers could be bent to suit the company. Section 247 solves this by tying such valuations to a registered valuer.

The basic rule: where the Companies Act requires a valuation of any property, stock, shares, debentures, securities or goodwill, or any other assets or net worth of a company or its liabilities, the valuation must be made by a person who is a registered valuer. The valuer is appointed by the audit committee or, if there is none, by the Board of Directors. The valuer must act as the Act and the Rules require. Typical triggers include preferential allotment, non-cash consideration, and a merger or amalgamation, where Sections 230-232 and the Rules require a valuation. Section 247 applies only where a provision of the Act or the Rules requires a valuation. It does not apply just because a company chooses to get one.

The Companies (Registered Valuers and Valuation) Rules, 2017 fill in the detail. They cover who can be a registered valuer, how they register, the role of the authority and registered valuers organisations (RVOs), the valuer's duties, and the valuation report. The route for an individual has three steps in order: qualify in the valuation examination, get enrolled as a member of an RVO, and then be registered with the authority, the Insolvency and Bankruptcy Board of India (IBBI). A partnership entity or a company can also be registered if it meets the conditions in the Rules, for example partners or directors who are themselves registered valuers. Registration is by asset class: Land and Building, Plant and Machinery, and Securities or Financial Assets. The Rules also set out qualification and experience conditions for each class.

The Act also punishes misconduct. A valuer who contravenes Section 247 or the Rules faces a fine. A valuer who acts with intent to defraud the company, its members or creditors faces imprisonment and a higher fine, and must also refund the remuneration received and is liable for damages for loss. The point to remember is that independence and a fair, documented valuation are the core of the law.

For the exam, you do not need to memorise the Rules clause by clause. You need to know the structure: when a registered valuer is required, who appoints, who can register, what duties apply, and what the penalty exposure is. Where you are unsure of a numeric limit, state the principle and avoid inventing a figure.

Key rules to remember

Trigger for Section 247: Valuation required under the Companies Act → must be by a registered valuer; Covers property, stock, shares, debentures, securities, goodwill, other assets, net worth and liabilities of a company.
Who appoints the valuer: Audit committee; if none, the Board of Directors; The valuer is not appointed by the management informally or by the party who benefits from the value.
Asset classes for registration: Land and Building | Plant and Machinery | Securities or Financial Assets; A valuer registers for specific asset classes and values only those classes.
Registration structure: Individual passes the valuation examination → is enrolled as a member of a registered valuers organisation (RVO) → is registered with the authority; The authority under the Rules is the Insolvency and Bankruptcy Board of India (IBBI). An individual can register as a valuer. A partnership entity or a company can also be registered if it meets the Rules' conditions, for example partners or directors who are themselves registered valuers.
Core duties of the valuer: Be independent and impartial → exercise due diligence → follow applicable valuation standards → keep records → disclose interest; Frame these as principles; the Rules also set a code of conduct.
Valuer's disqualifying interests: No valuation of an asset where the valuer, a relative or an associate has an interest, and no valuation of an entity they are connected with; Conflict of interest and lack of independence are the commonest exam angles.
Consequence of contravention: Contravention of Section 247 or Rules → fine of ₹25,000 to ₹1,00,000 (fine only) [Section 247(3)]; intent to defraud → imprisonment up to one year and fine of ₹1,00,000 to ₹5,00,000, plus refund of remuneration received and liability to pay damages for loss [Section 247(4)]; Refund of remuneration and damages for loss attach to the intent-to-defraud limb, not to ordinary contravention. The Act speaks of refund of remuneration and damages, not disgorgement. Know the principle first, then the amounts.

How to solve Companies Act 2013 and Registered Valuers Rules questions

Use the same sequence for a case question or a short note on Section 247 and the Rules.

1Identify the trigger: does the Companies Act or the Rules require a valuation (for example preferential allotment, non-cash consideration, or a merger under Sections 230-232 and the Rules)? If yes, Section 247 applies.
2State who must value: only a registered valuer, registered for the relevant asset class.
3State who appoints: the audit committee, or the Board if there is no audit committee.
4Check eligibility and independence: registration, asset class, and any interest or relationship that disqualifies the valuer.
5Apply the duties: independence, due diligence, valuation standards, records, and a reasoned report.
6Flag the consequence if the rule is broken: fine under the Act, and stronger action where there is intent to defraud.
7Give a clear conclusion: valid or invalid valuation, and what the company should do (for example appoint a fresh registered valuer).

Quickest way: Four-question check for any case

When to use it: Use this for MCQs and for the first lines of a written answer when time is short.

Is the valuation required by the Companies Act? If not, Section 247 may not apply.
Is the valuer registered for that asset class?
Was the valuer appointed by the audit committee or the Board?
Is the valuer independent, with no interest in the company or asset?
If any answer is no, the valuation does not meet Section 247 and a fresh valuation by a proper valuer is needed.

Common mistakes in Companies Act 2013 and Registered Valuers Rules

Saying Section 247 applies to every valuation a company ever does
Students read it as a general rule about valuers.
Fix: Say it applies where the Companies Act requires a valuation. Other laws, such as SEBI or FEMA rules, have their own valuer requirements.
Saying the promoter or the management appoints the valuer
In practice management arranges the work, so students assume it also appoints.
Fix: The law says the audit committee, or the Board if there is no audit committee. Write this exactly.
Treating registration as one general licence
Students ignore the asset classes.
Fix: Mention that registration is by asset class: Land and Building, Plant and Machinery, and Securities or Financial Assets. A valuer can value only the classes they hold.
Confusing the registering authority with the RVO
Both appear in the process and have similar-sounding roles.
Fix: Remember the chain: the individual enrolls with an RVO, which is the professional body, and registers with the authority, IBBI.
Mixing up the two penalty levels under Section 247
Both levels involve a fine, so students blur the amounts or forget the imprisonment limb.
Fix: Contravention of Section 247 or the Rules: fine of ₹25,000 to ₹1,00,000, and that is all. Intent to defraud the company, its members or creditors: imprisonment up to one year and a fine of ₹1,00,000 to ₹5,00,000. Refund of remuneration received and liability for damages for loss attach only to this intent-to-defraud limb under Section 247(4).
Missing the independence point in a case
Students focus on registration and skip the facts about relationships.
Fix: Read the case for hints such as a relative, a past role or a fee linked to the value. Any of these can break independence.

Worked examples

Example 1

Sapphire Textiles Ltd, an unlisted Indian company, plans a preferential allotment of shares to a group of investors. The managing director asks his brother-in-law, a chartered accountant who is not a registered valuer, to value the shares. Is this valuation acceptable under the Companies Act? Advise.

Show the solution

The Companies Act requires a valuation for a preferential allotment, so Section 247 is triggered.
Section 247 needs the valuation to be made by a registered valuer. The brother-in-law is not one, so he is not eligible.
The appointment must be by the audit committee or, if none, the Board. Here the managing director chose the person alone.
There is also an independence issue because the valuer is a close relative of a director.
Conclusion: the valuation does not meet the Act.

Answer: The valuation is not acceptable. Sapphire Textiles should have the audit committee, or the Board if there is no audit committee, appoint an independent registered valuer registered for the relevant asset class (Securities or Financial Assets) and obtain a fresh report before the allotment.

Example 2

A registered valuer registered only for Land and Building is asked by a company to value its plant and machinery for a scheme of amalgamation. The valuer accepts, knowing the machinery is specialised, and signs the report without keeping any working papers. Identify the issues.

Show the solution

A scheme of amalgamation under Sections 230-232 and the Rules requires a valuation, so Section 247 applies and a registered valuer is needed.
Registration is by asset class. This valuer holds Land and Building, not Plant and Machinery, so they cannot value the machinery.
The duty of due diligence is also not met, since the valuer signed without keeping records or supporting work.
The valuer is exposed to action under Section 247 and the Rules, including a fine for contravention.
Fix: the company should appoint a valuer registered for Plant and Machinery, and the valuer should document the work.

Answer: The valuation is invalid because the valuer is not registered for Plant and Machinery and has not met the duty to maintain records. The company should appoint a properly registered Plant and Machinery valuer, and the original valuer risks a fine under Section 247(3) for the contravention.

Exam tips

In MCQs, watch for options that name the wrong appointing body. The correct one is the audit committee, or the Board where there is no audit committee.
In case questions, check three things in order: is a valuation required by the Act, is the valuer registered for that class, and is the valuer independent.
Link this topic to the legal framework chapter. A good answer separates Section 247 from SEBI, FEMA and tax valuation rules.
Learn the penalty figures along with the principle: a fine of ₹25,000 to ₹1,00,000 for contravention, and for intent to defraud, imprisonment up to one year and a fine of ₹1,00,000 to ₹5,00,000, with refund of remuneration and damages for loss attaching to this second limb only. State the principle first, then the amounts.
End every written answer with a clear recommendation, for example appointing a fresh registered valuer.

Practice questions from Laws and Compliance in Business Valuation

Companies Act 2013 and Registered Valuers Rules in other exams

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

CS ProfessionalValuation Standards, Registered Valuers and Regulatory Framework

Companies Act 2013 and Registered Valuers Rules: frequently asked questions

What does Section 247 of the Companies Act, 2013 say?

It says that where the Act requires a valuation of property, stock, shares, debentures, securities, goodwill or other assets, net worth or liabilities of a company, it must be done by a registered valuer. The audit committee or the Board appoints the valuer. The valuer must follow the Act and the Rules.

Who is eligible to be a registered valuer in India?

An individual can become a registered valuer by meeting the qualification and experience conditions in the Registered Valuers Rules, 2017 for a given asset class, qualifying in the valuation examination, enrolling with a registered valuers organisation and registering with the authority. A partnership entity or a company can also be registered if it meets the conditions in the Rules, for example partners or directors who are themselves registered valuers. Check the Rules for the exact conditions before quoting them.

What are the duties of a registered valuer?

The valuer must act independently and impartially, exercise due diligence, follow the applicable valuation standards, keep proper records and disclose any interest. The Rules also contain a code of conduct. A report must be fair and supported by working.

What is the penalty under Section 247?

A valuer who contravenes Section 247 or the Rules is liable to a fine of ₹25,000 to ₹1,00,000 under Section 247(3). If the valuer acted with intent to defraud the company, its members or creditors, the consequence under Section 247(4) is imprisonment up to one year and a fine of ₹1,00,000 to ₹5,00,000. In that case the valuer must also refund the remuneration received and is liable to pay damages for loss.