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

Kaveri Textiles Ltd. appoints a registered valuer to value its plant and machinery for a restructuring. The valuer's brother holds 2% shares in Kaveri Textiles Ltd. and is also its employee. Under the Companies (Registered Valuers and Valuation) Rules, 2017, what is the correct position on the valuer's independence?

The valuer must not accept the assignment. The 2017 Rules require independence and bar a valuer from valuing assets of a company where he or a relative has an interest or connection, such as employment or shareholding. Disclosure or Board consent cannot remove this conflict.

  1. AThe valuer is eligible because 2% shareholding is minor
  2. BThe valuer is eligible if the Board gives written consent
  3. CThe valuer cannot value the asset if the valuer or a relative is connected with the company, so he must not undertake the valuationCorrect
  4. DThe valuer may proceed provided he discloses the relationship in the report

Explanation

The Rules require a valuer to be independent and not to undertake valuation of assets in which he, or his relative, has a direct or indirect interest or is connected with the company, for example as an employee or shareholder. Disclosure in the report or Board consent does not cure the disqualification, so options a, b and d fail.

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