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CS Professional · Corporate Restructuring, Valuation and Insolvency · Overview of Business Valuation

Mehra Engineering Pvt Ltd engages a registered valuer for a share swap. The valuer finds that his brother holds a significant stake in the target. Which course is consistent with the valuer's professional role?

The valuer should disclose the conflict and decline the assignment. A close relative's significant stake in the target impairs independence and objectivity. Reducing the fee, obtaining promoter approval or disclosing only on request does not remove the conflict or satisfy the valuer's duty of disclosure.

  1. ADisclose the interest and decline the assignment, since independence is compromisedCorrect
  2. BProceed but quietly lower his fee to offset the conflict
  3. CProceed after asking the target's promoters to approve him
  4. DProceed and mention the relationship only if asked by the board

Explanation

A valuer must be independent and objective, and must disclose any interest or conflict. A close relative's significant holding in the target impairs independence, so the proper course is disclosure and declining. Fee reductions or promoter consent do not cure the conflict, and waiting to be asked breaches the disclosure duty.

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