Registered Valuer Under Section 247: When Valuation Is Mandatory

Four different Indian statutes demand a valuation, and each accepts a different signatory. This is the map of who signs what, and what happens when the wrong person signs.

Last verified: 5 September 2026 · Applies to: transactions on or after 1 April 2026

Contents

• The wrong valuer is a more common problem than the wrong number
• The who-signs-what map
• Section 247: registered valuer, no substitutes
• FEMA, IBC and income tax: three different answers
• Decision tree: you are doing X, so you need Y signed by Z
• What is coming, and what is not law yet
• Frequently asked questions
• How BVACA can help

The wrong valuer is a more common problem than the wrong number

A founder raising a round asks their auditor for "a valuation". The auditor is a chartered accountant in practice, produces a competent report, and the company files it with a preferential allotment. Some months later, at diligence or at a hearing, someone asks whether the signatory holds a registration under the Companies (Registered Valuers and Valuation) Rules, 2017. They do not. The number may have been perfectly defensible. The report still fails, because section 247 of the Companies Act, 2013 does not ask whether the valuer was competent; it asks whether the valuer was registered.

The reverse happens too. A company appoints an IBBI Registered Valuer for a share issue to an overseas investor, at real cost, and then discovers the authorised dealer bank wanted a certificate under a different rule using a different pricing standard.

Both mistakes come from the same assumption: that "the valuation" is one thing. It is not. Indian law has four separate valuation mandates running in parallel, each with its own trigger, its own permitted method and its own list of acceptable signatories. Get the signatory right and the report survives. Get it wrong and the work is repeated, usually against a deadline.

The who-signs-what map

Read that table twice. The same company, in the same quarter, issuing shares to a foreign investor and granting ESOPs, needs an IBBI Registered Valuer, a Rule 21 signatory and a SEBI Category I Merchant Banker, and needs to satisfy a Rule 57 formula that none of them may have been asked to compute.

Section 247: registered valuer, no substitutes

Section 247 of the Companies Act, 2013 requires that where a valuation is required under the Act of any property, stocks, shares, debentures, securities, goodwill, other assets or net worth of a company or its liabilities, it must be done by a person registered as a valuer. IBBI remains the delegated Authority under the Companies (Registered Valuers and Valuation) Rules, 2017.

Registration is by asset class. There are three:

• Land and Building
• Plant and Machinery
• Securities or Financial Assets

A valuer registered for Land and Building cannot sign a share valuation. A valuer registered for Securities or Financial Assets cannot sign the land component of a slump sale. This sounds obvious written down, and is still one of the most frequent defects we see in reports produced for filings, because the engagement was given to a firm rather than checked against an individual's registration.

Practical checks before you sign the engagement letter:

1. Ask for the individual valuer's IBBI registration number, not the firm's letterhead.
2. Confirm the asset class on the registration matches what you are valuing. A transaction involving a factory and its shareholding needs two registrations, and often two valuers.
3. Confirm the registration is current, and that the person who will actually sign the report is the registered person.
4. Where the transaction also needs a FEMA certificate or an income-tax working, say so at the outset. It changes the scope, and sometimes the signatory.

Being a chartered accountant, a cost accountant or a merchant banker does not by itself make a person a registered valuer. Registration is a separate qualification with its own examination and membership requirements, held by an individual.

If you have not commissioned a valuation before, our note on what a valuation engagement actually involves sets out the information we ask for, what the report contains and how long it takes.

FEMA, IBC and income tax: three different answers

FEMA, Rule 21 of the NDI Rules. A wider list of signatories: a chartered accountant, a SEBI Category I Merchant Banker or a practising cost accountant. The valuation must use an "internationally accepted pricing methodology on an arm's length basis", which is a standard rather than a formula. Fair value operates as a floor for an issue or transfer to a non-resident and as a ceiling for a transfer from a non-resident to a resident. We work through both directions, with the numbers, in our note on the FEMA pricing guidelines for share issues and transfers.

IBC, Regulations 27 and 35. The insolvency framework is the outlier and the strictest. It requires two independent sets of registered valuers to value the assets, and if their estimates diverge by 25% or more, a third set is appointed. This is the only place in Indian law where dual valuation is mandated, and it exists because the fair value and liquidation value of a distressed company drive who recovers what. If you are advising a resolution applicant or a committee of creditors, the valuation is not a compliance formality, it is the arithmetic of the outcome.

Income tax. Two rules, and they do not agree with each other. Rule 57 (the successor to Rule 11UA) fixes the fair market value of unquoted equity shares by a prescribed formula, and discounted cash flow is not among the permitted methods. Rule 15 (the successor to Rule 3(9)(ii)) fixes ESOP perquisite FMV and requires a SEBI Category I Merchant Banker, who may use DCF. The full analysis sits in our article on Rule 57, the successor to Rule 11UA.

Decision tree: you are doing X, so you need Y signed by Z

Illustrative example. An unlisted private company in the Tricity raises ₹12 crore, of which ₹8 crore comes from a Singapore fund and ₹4 crore from resident angels, and refreshes its ESOP pool in the same board meeting. Figures are invented for illustration.

That single board meeting requires: an IBBI Registered Valuer report under section 247 for the preferential allotment; a Rule 21 pricing certificate for the non-resident tranche, on an internationally accepted pricing methodology, establishing a floor below which the shares cannot be issued to the fund; a SEBI Category I Merchant Banker certificate under Rule 15 for the ESOP perquisite FMV, which must still be within 180 days when employees exercise; and a Rule 57 working if any existing shareholder transfers unquoted equity shares as part of the round. Four documents, three different signatories, one meeting. Commissioning them in sequence rather than in parallel is the usual reason a round slips by a month.

What is coming, and what is not law yet

The Corporate Laws (Amendment) Bill, 2026 contains, at Clause 73, a proposal to elevate IBBI to a statutory Valuation Authority, with penalties of up to ₹10 lakh and suspension of registration for up to 10 years.

The Bill is not enacted. It stands referred to a Joint Parliamentary Committee. Nothing in it is operative, and no valuation report should cite it as authority. It is worth tracking for two reasons: it signals a tightening enforcement posture on valuer conduct, and if enacted it would raise the cost of an unsupportable report considerably. Plan documentation standards as though it will pass; cite the law as it stands.

Frequently asked questions

Can my company's auditor do the valuation under section 247?

Only if that individual is separately registered as a valuer with IBBI in the relevant asset class. Being a chartered accountant is not enough for a section 247 valuation. Independence questions also arise where the statutory auditor values the company they audit, so most companies appoint a separate registered valuer for section 247 work.

Is a registered valuer needed for a rights issue?

Section 247 attaches to the valuations the Companies Act itself requires, which include preferential allotment, private placement, merger or demerger, buy-back and non-cash transactions under section 192. A rights issue to existing shareholders in proportion to holdings does not carry the same statutory valuation requirement, but the position depends on the structure, so confirm before you assume it.

What are the three registered valuer asset classes?

Land and Building; Plant and Machinery; and Securities or Financial Assets. Registration is granted per class to an individual. A transaction spanning more than one class, such as a business transfer of a manufacturing unit, needs a valuer registered in each relevant class.

Do I need two valuations under IBC?

Yes. Regulations 27 and 35 require two independent sets of registered valuers, and a third set where the two estimates diverge by 25% or more. It is the only Indian statute mandating dual valuation, and the requirement cannot be waived for cost.

Can one report satisfy the Companies Act, FEMA and income tax at once?

Rarely, and never by accident. The permitted methods differ: FEMA requires an internationally accepted pricing methodology, income-tax Rule 57 prescribes a formula for unquoted equity shares, and section 247 requires a registered valuer's opinion. A single engagement can produce all of them, but as separate deliverables with separate bases stated on the face of each.

How long is a valuation report valid?

It depends on the purpose. Rule 15 is explicit: an ESOP perquisite certificate must be no more than 180 days old at the exercise date. Certificate currency under FEMA Rule 21 is dealt with in our FEMA pricing guidelines for share issues and transfers. For section 247 there is no single statutory shelf life, so the practical test is whether anything material changed between the valuation date and the transaction date.

How BVACA can help

Bachhal Vijender & Associates holds IBBI Registered Valuer credentials within the practice and prepares valuations for Companies Act, FEMA, income-tax and transaction purposes. At the instruction stage we set out which reports your transaction actually needs, who has to sign each one and in what order they should be commissioned, so the merchant banker certificate and the registered valuer report are not being chased in the same week as a board meeting. Where a mandate falls outside our registration, we say so and coordinate with the right signatory rather than stretching a report to cover it. Our IBBI Registered Valuer and valuation services page sets out scope, and corporate secretarial and compliance support covers the filings that follow. If you want the underlying method comparison first, start with the mechanics of DCF, comparables and net asset value.

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Author box: CA Vijender Singh Bachhal, Managing Partner, Bachhal Vijender & Associates (FRN 028355N), Panchkula. About the firm

Disclaimer: This article is general information current as at 5 September 2026, not advice for a specific situation. Tax and corporate law in India changed materially on 1 April 2026; verify the position before acting. Illustrative examples are not client matters.