Business valuation in India is no longer an open field where any chartered accountant, merchant banker, or consultant can sign off on a number. For a defined set of statutory triggers, the law names one specific category of professional: a valuer registered with the Insolvency and Bankruptcy Board of India (IBBI). This piece looks at where that requirement comes from, why it was created, and where it does — and does not — apply.
The Statutory Basis: Section 247 of the Companies Act, 2013
The requirement traces to Section 247 of the Companies Act, 2013. As originally drafted, the section required valuation to be carried out by “a person having such qualifications and experience… registered as a valuer in such manner.” That language was open-ended until the Companies (Removal of Difficulties) Second Order, 2017, amended it to require that the valuer also be a member of a recognised valuer organisation and registered with a designated Authority.
On 23 October 2017, the Central Government exercised its power under Section 458 of the Companies Act to delegate the functions of that Authority to the IBBI. This is a detail worth noting in any technical piece: the IBBI’s authority over company-law valuations does not come from the Insolvency and Bankruptcy Code, 2016, which created the Board — it comes from a separate delegation under the Companies Act. The IBBI effectively wears two hats: insolvency regulator, and valuation regulator.
Section 247(2) also fixes the standard of conduct for the valuer, not just the registration requirement. The registered valuer is statutorily required to make an impartial, true and fair valuation, exercise due diligence, and avoid undertaking valuation of any assets in which they have a direct or indirect interest during or after the valuation. Section 247(3) attaches a penalty for contravention, extending to a fine and, in cases involving intent to defraud, imprisonment along with disgorgement of fees received and liability for damages.
The Rules That Operationalise Section 247
The Companies (Registered Valuers and Valuation) Rules, 2017, issued the same day as the delegation notification, set out the actual registration mechanics:
- Three recognised asset classes — Land and Building; Plant and Machinery; and Securities or Financial Assets. Business valuation for shares, goodwill, or enterprise value falls under the Securities or Financial Assets class.
- Eligibility (Rule 4 read with Annexure IV) — a combination of prescribed educational qualification, professional membership (CA/CS/CMA/CFA or a postgraduate degree in finance, commerce, or related disciplines), and years of post-qualification experience, scaled depending on the qualification route.
- Mandatory IBBI Valuation Examination — a computer-based exam specific to the asset class, testing valuation standards, methodologies, and the regulatory framework itself.
- Membership of a Registered Valuers Organisation (RVO) — the individual must first be admitted as a valuer member of an RVO recognised by the IBBI, which conducts the required 50-hour training programme, before applying for registration.
- “Fit and proper” criteria (Rule 3(1)(k)) — covering integrity, financial solvency, and absence of disqualifying convictions.
A transitional window under Rule 11 allowed existing valuation practitioners to continue rendering services without registration up to 31 March 2018, later extended. That grace period is long closed.
The Effective Date That Made Registration Compulsory
The mandatory-registration requirement did not bite immediately. Practitioners could still render valuation services during the transition period referenced above. The IBBI’s own clarificatory circulars fixed 1 February 2019 as the date from which only a person registered with the IBBI could conduct valuations required under the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016. Any valuation report dated after that cut-off, prepared by someone outside the IBBI register, does not satisfy the statutory requirement — regardless of the preparer’s other professional credentials.
Why the Law Insists on a Separate, Registered Category
Three regulatory concerns explain the design choice, and each is traceable to the legislative history:
1. Standardisation across a fragmented practice. Before 2017, valuation in India had no dedicated licensing regime. Chartered accountants, merchant bankers, and unregulated “valuers” all issued reports using varying methodologies, with no common syllabus, no common code of conduct, and no common disciplinary mechanism. The Valuation Professionals Bill, 2008 attempted to formalise this and lapsed with the dissolution of Parliament; Section 247 and the 2017 Rules effectively revived that project inside company law.
2. Independence and conflict-of-interest control. Section 247(2)(c)–(d) explicitly bars a registered valuer from valuing an asset in which they hold a direct or indirect interest, and restricts them from undertaking the valuation of the same company continuously beyond a prescribed cooling-off structure enforced through the RVO’s code of conduct. This is a materially stronger independence framework than existed when valuation was an unregulated advisory service.
3. A single point of accountability for stressed-asset and stakeholder-facing valuations. The 2016–17 period coincided with the early wave of cases under the Insolvency and Bankruptcy Code, where valuation of distressed corporate assets directly determined recovery for creditors. The IBBI’s disciplinary committee and appellate panel, created for RVOs, gave the system one enforcement chain — something a purely voluntary CA-led valuation practice did not have.
Where the IBBI-Registered Valuer Requirement Actually Applies
This is the section most technical readers are looking for, because the requirement is not universal — it is trigger-specific.
Mandatory IBBI Registered Valuer:
- Valuation of shares, assets, goodwill, or net worth under Section 247 read with the Companies Act, 2013 — including valuation for further issue of share capital, non-cash consideration for share swaps, and valuation in schemes involving asset transfers.
- Valuation under the Insolvency and Bankruptcy Code, 2016 — fair value and liquidation value of a corporate debtor during the Corporate Insolvency Resolution Process (Regulation 27 and 35 of the IBBI (CIRP) Regulations, 2016), valuation for voluntary liquidation (Section 59(3)(b)(ii)), and valuation of avoidance or undervalued transactions identified by a resolution professional (Section 46).
- The IBBI’s own circulars of October 2018 and August 2019 went further, stating that a valuation performed by anyone other than a registered valuer under the IBC framework is not merely non-compliant but treated as invalid for that process, and fees paid to a non-registered valuer cannot be counted as part of insolvency resolution or liquidation costs.
Where a Registered Valuer is one option among several, or not required at all:
- Under the Income Tax Act, 1961, fair market value of unquoted equity shares for the purposes of Section 56(2)(x) and Rule 11UA is typically determined by a merchant banker or an accountant using the prescribed methods — a different professional category than an IBBI-registered valuer, though some registered valuers also hold merchant banker status.
- Valuation for mergers, amalgamations, and minority buy-outs under the older MCA framework has historically been permitted through an independent SEBI-registered merchant banker or a chartered accountant in practice with a minimum specified experience.
- FEMA pricing guidelines for cross-border share transactions typically call for a merchant banker or a chartered accountant’s valuation certificate, not necessarily an IBBI-registered valuer, though in practice many cross-border transactions commission both a Companies Act valuation and a FEMA-compliant valuation from the same firm to cover both requirements in one engagement.
This distinction matters commercially: a business preparing for a funding round, an ESOP exercise, and a subsequent share allotment may need reports from more than one category of valuer for the same underlying transaction, because each statute names its own qualifying professional.
The Practical Cost of Getting This Wrong
Engaging a valuer outside the IBBI register for a Companies Act or IBC-triggered valuation does not just create an audit finding. The report itself carries no statutory standing for that purpose — a resolution plan, a share allotment resolution, or a liquidation estate valuation built on it is exposed to challenge before the NCLT or the IBBI’s disciplinary process, and the cost of a fee paid to a non-registered valuer is disallowed as part of the insolvency process cost. For promoters and finance teams, the operative question before commissioning any valuation is not “is this person a competent valuer” but “is this the statute-defined valuer for this specific trigger” — and for Companies Act and IBC purposes, that answer is a valuer holding a current IBBI registration certificate in the relevant asset class.