Valuation and Restructuring
Registered Valuer Reports Under Section 247

Valuation is where most corporate transactions are actually decided. The share exchange ratio in a merger, the price of a preferential allotment, the entitlement of dissenting creditors in a resolution plan, the exercise price of an option, the consideration in a related party transfer — each turns on a number that somebody has to be able to defend.

Until 2017, almost anybody could produce that number. There was no register of valuers, no prescribed qualification, and no disciplinary mechanism. Section 247 of the Companies Act, 2013 and the registered valuer rules that followed changed the position completely: valuation for most company law purposes is now a regulated activity performed by a registered individual or entity within a defined asset class.

N D Savla & Associates provides valuation and restructuring services to companies across Mumbai, Navi Mumbai, Thane and Goa — business and securities valuations, valuations supporting mergers and schemes, insolvency valuations, ESOP and tax valuations, and reports for regulatory filing. We prepare reports that state the methodology, disclose the assumptions and survive scrutiny.

Section 247 provides that where a valuation is required under the Act in respect of any property, stocks, shares, debentures, securities, goodwill, any other assets or the net worth of a company or its liabilities, it must be carried out by a person having the required qualifications and experience, registered as a valuer and a member of a registered valuers organisation.

The machinery is in the Companies (Registered Valuers and Valuation) Rules, 2017, with the Insolvency and Bankruptcy Board of India designated as the administering authority. Valuers register in one or more of three asset classes: securities or financial assets, land and building, and plant and machinery. A valuer may only value within the class for which they are registered, which is why a single transaction frequently requires more than one report.

The section also imposes duties and consequences. A registered valuer must make an impartial, true and fair valuation, exercise due diligence, and not undertake a valuation of any asset in which they have a direct or indirect interest. Contravention carries penalty, and where intended to defraud, the consequences include liability to refund the remuneration and compensate the company for loss.

The current framework exists because the previous absence of one produced consistently poor outcomes in exactly the transactions where valuation mattered most.

Under the Companies Act, 1956 there was no general requirement for an independent valuation and no register of valuers. Where a court sanctioning a scheme wanted valuation evidence it relied on a report from a chartered accountant or merchant banker with no prescribed methodology or standard.

The constraints on price came from elsewhere. The Capital Issues (Control) Act, 1947 established the Controller of Capital Issues, who determined not only whether a company could issue capital but at what price, applying formulae rather than commercial judgement. That regime ended in 1992 when the Act was repealed and SEBI assumed responsibility for the public issue market on a disclosure basis — creating, for the first time, a real need for defensible valuation.

Demand grew rapidly through the 2000s: private equity and venture capital investment, cross-border M&A, and FEMA pricing guidelines all required share valuations that would withstand examination. Tax authorities began scrutinising transaction prices more closely, and provisions taxing transfers below fair market value made valuation itself a determinant of tax liability.

The Companies Act, 2013 responded with Section 247, but implementation took four years. The section and the Companies (Registered Valuers and Valuation) Rules, 2017 were notified in October 2017, with IBBI appointed as the authority. The Insolvency and Bankruptcy Code, 2016 reinforced the framework by requiring registered valuers to determine fair value and liquidation value in every resolution process.

Valuation standards followed registration — IBBI valuation standards, accounting-profession valuation standards, and Ind AS 113 for financial reporting. Tax valuation continued on its own track, and the Income-tax Act, 2025, effective from 1 April 2026, replaced the 1961 Act, so provisions and numbering require checking against the current statute.