SKP Business Alert
31 October 2017
Notification of Valuation Rules under the Companies Act
 
long-awaited legislation that provides a framework for governing valuations, as well as valuation professionals (Valuers), has been notified by the Ministry of Corporate Affairs on 18 October 2017 i.e. The Companies (Registered Valuers and Valuation) Rules, 2017 (the Rules).

Highlights
  • The Rules establish a framework specifying the criteria with respect to the eligibility, qualifications, registration, recognition, and suspension of Valuers.
  • The Rules elucidate the educational qualifications and requisite work experience required for different asset classes.
  • At present, individuals, partnership firms and companies providing valuation services under the Companies Act, 2013 will be required to register themselves as per these Rules, subject to fulfilment of the applicable eligibility criteria.
  • The Model Code of Conduct for Valuers has been notified.
     
Transition
  • Considering the timeframe required to comply with the above criteria, the Rules have provided for a transition period till 31 March 2018.
  • During the transition period, any person who renders valuation services under the Companies Act, 2013 may continue to render such services without registration under the Rules.
     
Next Steps
  • The Rules mandate the formation of a committee to formulate and lay down valuation standards and policies for compliance by companies and Valuers. Till then, the Valuers will have to follow internationally accepted valuation methodologies.
  • The Insolvency and Bankruptcy Board of India (IBBI) is proposed to be officially designated as the regulating authority for valuation services under the Companies Act.
SKP's Comments
The Rules are a welcome step towards regulating and expanding the valuation profession. With the emphasis on financial reporting shifting towards fair value, the roles and responsibilities of Valuers have gained greater significance. These Rules reflect the government’s continuous commitment to enable better corporate governance.
SKP
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