What Is a Registered Valuer? Companies Act S.247

A registered valuer is the person whose number decides what a minority shareholder gets paid. Under the Companies Act, 2013, whenever a valuation is required for shares, assets, net worth or liabilities, it has to be done by a registered valuer rather than by the company, its bankers or its management. Section 247 sets out who qualifies, who appoints them, what they owe, and what happens when the number is wrong.

When a registered valuer is required

Section 247(1) does not enumerate the occasions. It applies wherever a valuation is required to be made under any provision of the Act, in respect of property, stocks, shares, debentures, securities, goodwill or any other assets, or the net worth of a company or its liabilities.

The clearest example for a public-market shareholder is the minority squeeze-out. Section 236(2) requires an acquirer at or above ninety per cent to offer to buy the remaining equity shares at a price determined on the basis of valuation by a registered valuer, in accordance with prescribed rules. The same price then governs the reverse route in section 236(3), where the minority offer to sell.

The qualification language in section 247(1) was itself substituted by notification S.O. 3400(E) with effect from 23 October 2017, replacing earlier wording with the current formulation of prescribed qualifications, registration as a valuer, and membership of a recognised organisation.

Who appoints the valuer, and why it matters

Placing the appointment with the audit committee is a governance choice, not a formality. In a squeeze-out, a related party purchase or a scheme, the executives negotiating the transaction are not the people who choose the person pricing it.

What the valuer owes

Section 247(2) sets four duties:

1. Impartiality. Make an impartial, true and fair valuation of any assets required to be valued.
2. Due diligence. Exercise due diligence while performing the functions of valuer.
3. Compliance with the rules. Make the valuation in accordance with such rules as may be prescribed.
4. No interest, three years either side. Not undertake valuation of any asset in which the valuer has a direct or indirect interest, or becomes so interested at any time during a period of three years prior to appointment or three years after the valuation was conducted.

That fourth duty is worth reading twice. The window is symmetric: three years before appointment and three years after the valuation was conducted. The three-year look-back is what the substitution made by Act 1 of 2018, section 74, with effect from 9 February 2018, added. It replaced the open-ended "during or after the valuation of assets" wording, capping the previously unbounded forward limb at three years in the same stroke.

What happens when a valuation is defective

Section 247(3) sets a penalty of fifty thousand rupees for contravening the section or the rules made under it. The amount was substituted by notification S.O. 1303(E) with effect from 24 March 2021.

The proviso escalates for intent: where the valuer contravened the provisions with the intention to defraud the company or its members, the punishment is imprisonment which may extend to one year, and a fine of not less than one lakh rupees which may extend to five lakh rupees.

Section 247(4) adds consequences on conviction under section 247(3). The valuer is liable to refund the remuneration received to the company, and to pay damages to the company or to any other person for loss arising out of incorrect or misleading statements of particulars made in the report.

That second limb is the one a minority shareholder can point at. A person other than the company can be the injured party.

Where this sits in the disclosure picture

The valuation report itself is usually not a standalone exchange filing. It reaches the market attached to something else: a scheme document, an open offer letter, a postal ballot notice, or the explanatory statement for a resolution. Its number is the part that ends up quoted.

• Section 235 vs section 236 is the squeeze-out route where a registered valuer's price is the whole question.
• What is a scheme of arrangement is the instrument a share exchange ratio gets valued for.
• SEBI delisting and reverse book building is the route where price discovery happens by bidding instead of by valuation.
• How to check related party transactions covers the disclosure lane where valuations of intra-group deals surface.

Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.