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Corporate Restructuring, Valuation and Insolvency · Overview of Business Valuation

Valuation Process and Registered Valuer's Role

Updated 11 October 2026 · Fact-checked

A valuation engagement moves from appointment and defining the purpose, premise and valuation date, to collecting information, choosing methods, computing value and issuing a report. Under Section 247 of the Companies Act, 2013, a valuation required by the Act must be done by a registered valuer who is independent and follows the prescribed standards and ethics.

Understand Valuation Process and Valuer's Role

A valuation is an opinion of value, not a fact. Two valuers can reach different figures, so the process must be clear, documented and defensible. That is why the process and the valuer's role matter in your exam.

A valuation engagement starts with the terms of appointment. The valuer fixes the purpose (for example, a share swap in a merger), the standard and premise of value (for example, fair value, going concern), and the valuation date. Everything later depends on these three choices. A wrong purpose gives a wrong method.

Next the valuer collects information: financial statements, projections, asset records, contracts, litigation and industry data. Then the valuer analyses the business, selects suitable approaches (asset, income, market), applies them, and reconciles the results to one value or a range. The conclusion is issued as a valuation report, supported by working papers.

The Companies Act, 2013 uses valuers where an independent opinion protects stakeholders. Section 247 says that where the 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, it must be done by a person registered as a valuer. The valuer is appointed by the audit committee, or by the Board if there is no audit committee.

The valuer must be independent, act with integrity and follow the Companies (Registered Valuers and Valuation) Rules, 2017. These Rules deal with eligibility, registration through a Registered Valuers Organisation (RVO), asset classes, the code of conduct and valuation standards. Penalty applies for intentional misstatement or concealment. Check the current text of Section 247 and the Rules in your study material before the exam.

Key rules to remember

Who must value (Section 247)
Valuation required under the Act → by a registered valuer appointed by the audit committee or, if none, the Board
The valuer must be independent of the company and its related persons, and must follow the notified standards.
Core inputs of every engagement
Purpose + Premise/Standard of value + Valuation date
State all three at the start of the report. Method choice follows from them.
Process sequence
Appointment → Scope → Information → Analysis → Method selection → Computation → Reconciliation → Report
Use this order as a skeleton for any answer on steps in valuation.
Registered valuer structure
Individual → enrolled with a Registered Valuers Organisation (RVO) → registered under an asset class with the authority (IBBI)
Asset classes include land and building, plant and machinery, and securities or financial assets.

How to solve Valuation Process and Valuer's Role questions

For any question on the process or the valuer, answer in provision, facts, conclusion order.

  1. 1Identify what is asked: process steps, report contents, valuer eligibility, or duties and ethics.
  2. 2State the provision first: Section 247 and the Companies (Registered Valuers and Valuation) Rules, 2017.
  3. 3List the process steps in sequence, giving one line on what is done at each step.
  4. 4Apply to the facts: who appointed the valuer, whether the valuer is independent, and whether the asset class matches the registration.
  5. 5Check conflicts: any relationship, interest or prior service that affects independence.
  6. 6Conclude clearly: valid or invalid valuation, or the action the company should take.
  7. 7Add a practical point: written terms of engagement, working papers and a signed, dated report.

Quickest way: Purpose-Premise-Date check

When to use it: Use when time is short or the question is a short case on a valuation engagement.

  1. Write the purpose, premise of value and valuation date in one line.
  2. Name the rule: Section 247, registered valuer, independence.
  3. Test the facts: who appointed, asset class, any conflict.
  4. Give the conclusion and one corrective step.

Common mistakes in Valuation Process and Valuer's Role

  • Saying the valuer is appointed by the Board in every case.

    Students remember only the Board as the appointing body.

    Fix: Write that the audit committee appoints, or the Board if there is no audit committee.

  • Treating the valuation report as a single number.

    Students focus on calculation, not disclosure.

    Fix: List purpose, date, basis and premise of value, information used, methods, assumptions, limitations and conclusion, plus the valuer's signature and registration details.

  • Ignoring independence and conflict of interest.

    Case facts are read for numbers, not relationships.

    Fix: Scan the facts for any link between valuer and company, and say that a conflicted valuer cannot give the valuation under the Act.

  • Confusing registered valuers with insolvency professionals.

    Both are regulated by the same authority in the syllabus.

    Fix: Keep them separate: valuers are registered through RVOs under the 2017 Rules; insolvency professionals through IPAs under the IBC.

  • Skipping the valuation date and premise.

    Students jump straight to methods.

    Fix: Always fix the purpose, premise and date first, then choose methods.

Worked examples

Example 1

Alpha Textiles Ltd proposes to issue shares at a preferential price and needs a valuation under the Companies Act. Its Board appoints the company's own finance manager, who is not a registered valuer, to value the shares. Advise.

Show the solution
  1. Provision: where the Act requires a valuation of shares or securities, Section 247 requires it to be done by a registered valuer.
  2. Appointment: the valuer is appointed by the audit committee, or the Board if there is no audit committee.
  3. Facts: the finance manager is not registered and is also an employee, so independence is absent.
  4. Conclusion: the valuation does not meet Section 247.
  5. Action: appoint an independent registered valuer in the relevant asset class (securities or financial assets) and obtain a signed report.

Answer: The valuation by the finance manager is not valid under Section 247. Alpha Textiles must appoint an independent registered valuer, through the audit committee or the Board if there is none.

Example 2

List the steps a registered valuer should follow in a valuation engagement for a merger and state what the report should contain.

Show the solution
  1. Step 1: Accept the engagement and record written terms, after checking independence and competence.
  2. Step 2: Define purpose (merger exchange ratio), premise of value and valuation date.
  3. Step 3: Collect financial statements, projections, asset details, contracts, litigation and market data.
  4. Step 4: Analyse the business, its industry and risks.
  5. Step 5: Select suitable approaches (asset, income, market) and apply them.
  6. Step 6: Reconcile results and reach a conclusion on value or range.
  7. Step 7: Issue the report with purpose, date, basis and premise, information used, methods and reasons, assumptions, limitations, conclusion and signature with registration details.
  8. Step 8: Keep working papers for the required period.

Answer: The engagement runs from appointment to reporting in the sequence above. The report must state purpose, valuation date, basis and premise of value, sources, methods, assumptions, limitations and the conclusion, signed by the registered valuer.

Exam tips

  • Open with Section 247 and the 2017 Rules before applying facts.
  • Always mention independence; many case questions hide a conflict.
  • Write the process as numbered steps; it scores well in a written paper.
  • Keep the report contents as a short list and add assumptions and limitations.
  • Do not quote section numbers or penalty figures unless you are certain of them.

Practice questions from Overview of Business Valuation

Valuation Process and Valuer's Role in other exams

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

Valuation Process and Valuer's Role: frequently asked questions

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

It requires that where the Act needs a valuation of property, stock, shares, securities, goodwill or other assets or liabilities, a registered valuer must do it. The valuer is appointed by the audit committee or the Board, and must be independent and follow the prescribed standards.

What is a Registered Valuers Organisation?

It is a body under the 2017 Rules through which individual valuers are enrolled and regulated by asset class. It also helps enforce the code of conduct among its members.

What should a valuation report contain?

It should state the purpose, valuation date, basis and premise of value, information relied on, methods used and why, assumptions, limitations and the conclusion. It must carry the valuer's signature and registration details.

Can a valuer value a company they have a relationship with?

No. The valuer must be independent and avoid conflicts of interest. If a conflict exists, the valuer should decline or the company should appoint another valuer.