Corporate Restructuring, Valuation and Insolvency · Valuation of Business and Assets for Corporate Restructuring

Valuation Standards, Registered Valuers and Regulatory Framework

Updated 11 October 2026 · Fact-checked

Valuation in restructuring must be done by a registered valuer where the law requires it. Section 247 of the Companies Act, 2013 sets the valuer's duties. The Companies (Registered Valuers and Valuation) Rules, 2017 set eligibility, asset classes and conduct. Until standards are notified, valuers follow RVO-adopted or internationally accepted standards such as IVS.

Understand Valuation Standards, Registered Valuers and Regulatory Framework

A valuation puts a number on a business or asset. In a merger, demerger or share swap, that number decides the exchange ratio or price. So the law controls who may value, how, and what the report must say.

The Companies Act, 2013 deals with valuation by a registered valuer in Section 247. 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 who is a registered valuer. The valuer is appointed by the audit committee, or by the Board if there is no audit committee. The valuer must be independent of the company. He must not be connected with or interested in the company, its holding company, its subsidiary or its associate company. The Rules also apply a cooling-off period to past connections, so check the period in the Rules before you answer on a past link such as earlier employment. The valuer must make an impartial, true and fair valuation, exercise due care, and follow the rules made under the Act. Penalties apply for contravention, and a valuer who acts with intent to defraud faces stronger consequences. Check the exact penalty wording in the bare Act before you quote figures.

The Companies (Registered Valuers and Valuation) Rules, 2017 operate the scheme. They create registration through a Registered Valuers Organisation (RVO) and recognise asset classes such as Land and Building, Plant and Machinery, and Securities or Financial Assets. The IBBI is the authority that regulates registered valuers. An individual must hold the prescribed qualification and experience for the asset class, pass the valuation examination, be a fit and proper person, and enrol as a member of an RVO. Partnership entities and companies can also be registered valuers, subject to the conditions in the Rules. Confirm current qualification details from the Rules before you answer on eligibility.

Standards tell the valuer how to work. Rule 18 of the Rules deals with valuation standards, and Rule 8 sets out the valuer's conduct. The valuer must follow the valuation standards notified or modified by the Central Government. Until the Central Government notifies standards, the valuer follows internationally accepted valuation standards or the standards adopted by the valuer's RVO. International Valuation Standards (IVS), issued by the International Valuation Standards Council, are the best-known internationally accepted standards. IVS sets out concepts such as bases of value, scope of work, and reporting. Whatever standard is used, the Companies Act and the Rules prevail over it.

In restructuring, a valuation report is a key preliminary document. For a scheme under Section 230, the valuation report supports the share exchange ratio and is placed before the Board, the shareholders and the Tribunal. For listed companies, SEBI's circular on schemes of arrangement requires a valuation report from an independent registered valuer, along with a fairness opinion from a merchant banker. Check the latest SEBI Listing Regulations and circular for the exact conditions.

Key rules to remember

Section 247 trigger: Valuation required under the Act → done by a registered valuer appointed by audit committee (or Board, if none); The valuer must be independent and must not be connected with or interested in the company, its holding, subsidiary or associate company. Check the cooling-off period in the Rules for past connections.
Valuer's duties under Section 247: Impartial, true and fair valuation + due care + follow the Rules; Link these to your answer on liability of the valuer.
Registration chain: Qualification and experience → valuation examination → RVO membership → IBBI regulation; Registration is by asset class. A valuer values only the class for which registered.
Asset classes: Land and Building | Plant and Machinery | Securities or Financial Assets; A valuer for shares of a company must be registered for Securities or Financial Assets.
Standards hierarchy: Act and Rules > notified standards > RVO-adopted or internationally accepted standards such as IVS; Until the Central Government notifies standards, the valuer follows RVO-adopted or internationally accepted standards (Rule 18 deals with standards; Rule 8 deals with conduct). None of them overrides the Act and Rules.
Listed company scheme: Valuation report from independent registered valuer + fairness opinion from merchant banker; Applies under SEBI's framework for schemes of arrangement. Verify current circular wording.

How to solve Valuation Standards, Registered Valuers and Regulatory Framework questions

For any question on valuer provisions or valuation in restructuring, use the provision, analysis, conclusion pattern.

1Identify what the question asks: who may value, what law requires a valuation, which standard applies, or what the report must contain.
2State the governing provision first: Section 247 of the Companies Act, 2013 and the Companies (Registered Valuers and Valuation) Rules, 2017.
3Match the facts to the rule: is a valuation mandated by the Act, is the valuer registered for the right asset class, who appointed the valuer, is the valuer independent.
4If the company is listed, add the SEBI requirements: independent registered valuer and merchant banker fairness opinion.
5Name the standard the valuer must follow: notified standards if any, otherwise internationally accepted standards such as IVS or the standards adopted by the valuer's RVO.
6Check for conflicts: any interest or relationship of the valuer with the company or the parties.
7Conclude clearly: valuation valid or defective, and what the company should do, such as appoint a fresh valuer or obtain the missing opinion.
8Add one drafting or compliance point, such as stating the basis of value and methods in the report.

Quickest way: Four-check test for valuer questions

When to use it: Use this when a case gives a valuation and asks whether it is valid or what the company must do.

Who: registered valuer, right asset class?
Appointed by: audit committee or Board?
Independent: any interest in the company?
Report: standards followed, basis and method stated, listed-company extras present?
Write the conclusion on the first failed check.

Common mistakes in Valuation Standards, Registered Valuers and Regulatory Framework

Saying any chartered accountant or merchant banker can value under Section 247.
Students link valuation with finance professionals in general.
Fix: State that Section 247 requires a registered valuer registered under the Rules. A fairness opinion by a merchant banker is a separate requirement.
Ignoring the asset class of registration.
Registration is remembered as one general licence.
Fix: Write that registration is by asset class, such as Securities or Financial Assets for share valuation.
Saying the Board always appoints the valuer.
The audit committee role is forgotten.
Fix: Write that the audit committee appoints, and the Board does so only where there is no audit committee.
Treating IVS as overriding Indian law, or as the only permitted standard.
IVS is global and sounds authoritative.
Fix: Describe IVS as one of the internationally accepted standards a valuer may follow until the Central Government notifies standards. The valuer may instead follow standards adopted by the RVO. The Act and the Rules prevail over any standard.
Mixing up the valuation report and the fairness opinion.
Both appear in listed company schemes.
Fix: The valuation report comes from the registered valuer. The fairness opinion comes from a merchant banker on that valuation.
Quoting penalty amounts or rule numbers from memory.
Students try to add precision.
Fix: Give the principle unless you are certain. A correct provision with sound analysis earns more than a wrong figure.

Worked examples

Example 1

Alpha Textiles Ltd, an unlisted company with no audit committee, proposes a preferential issue of shares to a promoter for consideration other than cash. The Board engages Mr Rao, a retired employee of Alpha who still holds shares in it and is registered as a valuer for Land and Building. He values the asset being transferred, which is a block of shares of another company. Advise on the validity of the valuation.

Show the solution

Provision: a preferential issue of shares for non-cash consideration needs a valuation report from a registered valuer under Section 62(1)(c) read with Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014. Section 247 then governs who values: a registered valuer who is independent and appointed by the audit committee, or by the Board if there is no audit committee.
Asset class: the asset is a block of shares, which falls under Securities or Financial Assets. Mr Rao is registered for Land and Building only.
Independence: Mr Rao holds shares in Alpha. That is an interest in the company, and a valuer must not be connected with or interested in the company or its holding, subsidiary or associate company. His shareholding therefore means he is not independent. His status as a retired employee is a separate point. Whether it disqualifies him depends on the cooling-off period in the Valuation Rules, which you should check against the date of his retirement. The defect on independence stands on the shareholding either way.
Appointment: an unlisted company may have no audit committee. Alpha has none, so appointment by the Board is proper.
Conclusion: the valuation is defective on asset class and on independence. The appointment by the Board is not a defect.

Answer: The valuation is not valid. Alpha should appoint, through the Board (as it has no audit committee), an independent valuer registered for Securities or Financial Assets, with no interest in Alpha, and obtain a fresh report.

Example 2

Beta Pharma Ltd, a listed company, proposes to merge with its wholly owned unlisted subsidiary and, separately, with a group company, Gamma Labs Pvt Ltd, which is not its wholly owned subsidiary. Explain the valuation requirements that the company should observe before the schemes go to the Tribunal.

Show the solution

Provision: both schemes fall under Section 230. Where shares are issued to the shareholders of the transferor, the valuation report is a preliminary document supporting the share exchange ratio.
Wholly owned subsidiary: SEBI's framework for schemes of arrangement generally exempts the merger of a wholly owned subsidiary into its parent from the valuation report and fairness opinion requirements. No new shares are issued to outside shareholders, so there is no exchange ratio to support. Confirm the exemption and its conditions in the current SEBI Master Circular.
Gamma Labs: this merger needs the full valuation exercise. The report must come from an independent registered valuer under Section 247 and the Registered Valuers Rules. For shares, the valuer must be registered for Securities or Financial Assets.
Standards: the valuer follows the applicable valuation standards, with IVS as a global reference. The report should state the basis of value, the methods and the weights used.
Fairness opinion: because Beta Pharma is listed, the registered valuer's report on the Gamma Labs merger is accompanied by a fairness opinion from a merchant banker. Verify the current circular.
Process: the Board considers the reports and approves the schemes. The Gamma Labs reports are circulated with the notice and filed with the Tribunal petition.
Conclusion: the two mergers are treated differently. The wholly owned subsidiary merger is generally exempt from the valuation report and fairness opinion. The Gamma Labs merger needs a registered valuer, standards-based reasoning and a merchant banker fairness opinion.

Answer: Beta Pharma need not obtain a valuation report or fairness opinion for the merger of its wholly owned subsidiary, subject to the current SEBI Master Circular. For the Gamma Labs merger, it should obtain a share exchange ratio report from an independent registered valuer and a merchant banker's fairness opinion, and place them before the Board, the shareholders and the Tribunal.

Exam tips

Open every answer with Section 247 and the 2017 Rules. Examiners look for the provision first.
Always check registration by asset class. It is a common hidden defect in case facts.
For listed company schemes, mention both the valuer's report and the merchant banker's fairness opinion.
Do not quote penalty amounts or rule numbers unless you are sure. Explain the principle instead.
Close with a practical step, such as appointing a fresh valuer or stating the valuation basis in the report.

Practice questions from Valuation of Business and Assets for Corporate Restructuring

Valuation Standards, Registered Valuers 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.

CMA FinalCompanies Act 2013 and Registered Valuers Rules

Valuation Standards, Registered Valuers and Regulatory Framework: frequently asked questions

Who can be a registered valuer in India?

A person who meets the qualification and experience set in the Companies (Registered Valuers and Valuation) Rules, 2017 for an asset class, passes the valuation examination and becomes a member of a Registered Valuers Organisation. Registration is regulated by the IBBI. Check the Rules for the latest details.

What does Section 247 of the Companies Act require?

It requires valuations that the Act mandates to be done by a registered valuer appointed by the audit committee or the Board. The valuer must be independent, make an impartial, true and fair valuation, exercise due care and follow the Rules.

Is a valuation report mandatory in a merger?

A valuation report is a standard preliminary document for a scheme, as it supports the share exchange ratio. For listed companies, SEBI's framework requires a report from an independent registered valuer and a fairness opinion from a merchant banker.

Are International Valuation Standards binding in India?

IVS is issued by the IVSC. Until the Central Government notifies valuation standards, the Rules allow a valuer to follow internationally accepted standards such as IVS, or the standards adopted by the valuer's RVO. The Companies Act and the Rules still prevail over any standard.