A registered valuer in India is a valuation expert who can assess the worth of stocks, bonds, intangible assets, and tangible assets. Chartered accountants (for example, in the case of stock valuations), engineers and surveyors (for property or physical asset appraisals), or specialized valuation experts can all conduct registered valuations. To practice as a registered valuer in India, you must have completed a particular amount of training, have more than 3 or 5 years of valuation experience, and have a valid, ongoing certificate of practice (COP).

What is registered valuer in India?

A registered valuer in India is a person or an organization that is registered with the bankruptcy board of India and insolvency as an approved valuer in agreement with companies. The concept of an IBBI registered valuer in India was first introduced in companies active in 2017 in order to manage and balance the valuation of liabilities and assets linked to a company.

The registered valuer in India concept was introduced by Indian law for the first time under Section 247 of Chapter VXII of the Indian Companies Act for matters that required valuation for the company’s assets under the act. The Ministry of Corporate Affairs introduced the Companies (Registered Valuers and Valuation) Rules, 2017 (“Rules”). The registered valuer in India concept or idea opened a new area of professional opportunity for people.

How to become a registered valuer in India?

You need to clear the valuation examination conducted by IBBI valuers. Five years of post-qualification experience plus graduation. The registered valuer IBBI, has three years of post-qualification experience plus post-graduation with three years of post-qualification experience and is part of any professional institute. You need to have at least three years of experience in relation to the valuation of the class of asset for which the registration seeks.

• Not a minor.
• Residents of India.
• With a sound mind.
• Not been sentenced for more than 6 months.

A registered valuer in India is a valuation professional who can value shares, securities, intangible assets, or tangible assets.

Important Points:

(a) The nature of the business and the history of the enterprise from its inception.

(b) Economic outlook in general and outlook of the specific industry in particular.

(c) The book value of the stock and the financial condition of the business.

(d) The earning capacity of the company.

(e) The dividend-paying capacity of the company.

(f) If goodwill or other intangible value.

(g) Sales of the stock and the size of the block of stock to be valued.

(h) Market prices of stock of corporations engaged in the same or a similar line of business.

(i) Contingent liabilities or substantial legal issues, within India or abroad, impacting the business.

(j) The nature of the instrument proposed to be issued and the nature of the transaction contemplated by the parties.

The valuation report consists of:

• Includes the purpose of a valuation.
• Sources of information.
• Procedures were executed to carry out the valuation.
• And all the factors influencing valuation.
• According to the company’s rules 2017, the registered valuers should state 11 key aspects in their report.
• He should also state any disclosure of the valuer’s conflict of interest.

What requires valuation by a registered valuer under the Act?

Any property, stocks, shares, debentures, securities, goodwill, or any other assets or net worth of a company or its liabilities that require valuation under the provisions of the Companies Act, 2013 shall be valued by a registered valuer in India.

In the Act, specific mention of valuation by a registered valuer in India has been made in the following sections:

(1) Section 62(1)(c): Further issue of share capital, other than rights issue and issue under a scheme of employee stock option.

(2) Section 192(2): Non-cash transaction involving directors.

(3) Section 230(2): Valuation report in case of a scheme of compromise or arrangement with creditors or members.

(4) Section 236(2): Purchase of minority shareholding.

(5) Section 281(1)(a) proviso: Submission of report by company liquidator.

(6) Section 305(2)(d): Declaration of solvency in case of a proposal to wind up voluntarily.

(7) Section 319(3)(b): Power of Company Liquidator to Accept Shares, etc., as Consideration for Sale of Property of Company.

Methods of valuation Before adoption of the methods of valuation, the registered valuer in India shall decide the approach to valuation based upon the purpose of valuation:

(a) The asset approach.

(b) Income approach.

(c) A market approach.

A registered valuer shall make a valuation of any asset as on valuation date, in accordance with any one or more of the following methods:

(a) Net asset value method:

Represents the value of an entity’s assets less the value of its liabilities.

(b) Market Price Method:

Under this method, the current price at which the subject of valuation is bought or sold in the market between unrelated third parties is taken into account.

(c) Yield method/Profit Earning Capacity Value (PECV):

Under this method, the value is calculated by capitalizing the average of the after-tax profits for the preceding three years (or such other period). (Adequate justification is available for choosing another period) at the capitalization rates specified in the report.).

(d) Discounted Cash Flow Method (DCF):

This method expresses the present value of the business as a function of its future cash earnings capacity.

(e) Comparable Companies Multiples Methodology (CCM):

This method uses the valuation ratios of a publicly traded company and applies that ratio to the company being valued (after applying an appropriate discount or premium, as the context may require).

(f) Comparable Transaction Multiples Method (CTM):

It entails valuation on the basis of similar transactions among unrelated parties in the peer group companies.

(g) Price of Recent Investment Method (PORI):

It entails valuation on the basis of a recent investment received in the company from an independent investor.

(h) Sum of the parts valuation (SOTP):

Each part of the business is valued according to the method(s) appropriate to that business. The results are summed up to obtain total value of the business.

(i) Liquidation value:

If the value is being calculated in a liquidation scenario,.

(j) Weighted Average Method:

Under this method, the weights are assigned to the values calculated under different valuation approaches.

External Government Website Link: IBBI