Navigate the intricacies of Section 247 of the Companies Act, 2013 governing registered valuers. Learn about their appointment, duties, and the importance of compliance for transparent and credible asset valuation.
Section 247 of the Companies Act, 2013 deals with the appointment of registered valuers for the purpose of valuation of any property, stocks, shares, debentures, securities, goodwill or any other assets or net worth of a company or its liabilities. The objective of this section is to ensure transparency and accountability in the valuation process and to protect the interests of shareholders and investors.
Under this section, every company is required to appoint a registered valuer for the purpose of valuation of its assets, liabilities, or business. The registered valuer must be registered with the Insolvency and Bankruptcy Board of India (IBBI) and must comply with the Code of Conduct specified by the IBBI. The appointment of the registered valuer can be made by the company in a general meeting or by the Board of Directors of the company.
The registered valuer appointed by the company must provide a valuation report in the prescribed format and manner, which must be based on internationally accepted valuation standards. The valuation report must include the following information:
- The details of the assets, liabilities or business being valued
- The purpose of the valuation
- The methodology and assumptions used for the valuation
- The qualifications and experience of the valuer
- The basis of the valuation
- Any limitations or disclaimers in the valuation report
The valuation report must be submitted to the company within the prescribed time limit, and the company must provide a copy of the report to its shareholders or creditors on request. The valuation report must also be filed with the Registrar of Companies (ROC) along with the financial statements of the company.
Section 247 has been introduced in the Companies Act, 2013 to replace the earlier provisions relating to valuation of assets and liabilities under the Companies Act, 1956. The new provisions have been introduced to ensure that the valuation process is conducted by independent, qualified and registered professionals, and to eliminate any scope for manipulation or bias.
There have been several cases where the provisions of Section 247 have been applied by the courts. In the case of Ajay Kumar v. Shree Ganesh Forgings Ltd. & Ors., the Hon’ble High Court of Delhi observed that the valuation report prepared by a registered valuer appointed by the company is binding on the shareholders and creditors of the company, and cannot be challenged unless there is material irregularity or fraud in the valuation process.
Similarly, in the case of Union of India v. Tech Mahindra Ltd., the Hon’ble Bombay High Court held that the valuation of assets or business of a company must be conducted by a registered valuer in accordance with the prescribed standards and guidelines, and any deviation from the same can render the valuation report invalid.
In conclusion, Section 247 of the Companies Act, 2013 is an important provision that ensures transparency and fairness in the valuation process of a company’s assets, liabilities or business. The appointment of registered valuers and the compliance with the prescribed standards and guidelines is crucial to maintaining the integrity and credibility of the valuation process. Companies must ensure that they appoint qualified and registered valuers and comply with the provisions of Section 247 to protect the interests of their shareholders and investors.
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