Law requires explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A valuation report is not a formality that sits in the file. In several places the Companies Act makes a transaction depend on it, and a report that is wrongly commissioned can hold up a share allotment or a general meeting. This guide maps the places where the Act itself asks for a registered valuer, and keeps the income-tax and FEMA positions apart, because they are separate valuations.
Where the Companies Act requires a valuation, section 247 says who values and who appoints. The Act itself names a registered valuer in a handful of places: a share issue to chosen persons, a non-cash deal with a director, a debt restructuring scheme before the Tribunal, a buy-out of the minority, and a liquidator's report. A report prepared for the Companies Act is not automatically the valuation that income-tax or FEMA asks for; each has its own rules and each needs its own check. Where a section is not listed here, the rules under it may also require a valuation.
Who values and who appoints: section 247
Section 247(1) applies wherever a valuation of property, stocks, shares, debentures, securities, goodwill, other assets, the net worth of a company or its liabilities is required under the Act. The valuer must be a person with the prescribed qualifications and experience, registered as a valuer, and a member of a recognised organisation. On appointment the section says the valuer is "appointed by the audit committee or in its absence by the Board of Directors of that company" (section 247(1)).
Section 247(2) lists four duties of that valuer:
- make an impartial, true and fair valuation;
- exercise due diligence;
- value in accordance with the prescribed rules; and
- not value any asset in which the valuer has a direct or indirect interest, or becomes interested during a period of three years before the appointment or three years after the valuation.
Sub-sections (3) and (4) deal with penalty and with refund of remuneration and damages; the figures are in the section 247 guide and are not repeated here. Who can be registered for which asset class is in the rules 3 and 4 guide, and what the report must contain is in the rule 8 guide.
If you are preparing for a share issue, an acquisition or a restructuring and want the valuation commissioned and read correctly, our financial and legal due diligence service covers that work.
Where the Act itself names a registered valuer
| Transaction | Section | What must be valued | Who uses the report | Live guide |
|---|---|---|---|---|
| Further issue of shares to chosen persons, for cash or otherwise | 62(1)(c) | The price of the shares, determined by the valuation report of a registered valuer | The Board and members passing the special resolution | Section 62 |
| Non-cash arrangement with a director or connected person | 192(2) | The assets involved in the arrangement | Members, through the general meeting notice | Sections 192-194 |
| Compromise or arrangement with a debt restructuring scheme | 230(2)(c)(v) | The shares and all assets, tangible and intangible, movable and immovable | The Tribunal, through the affidavit filed with the application | Section 230 |
| Purchase of minority shareholding by a 90 per cent holder | 236(2) | The price of the remaining equity shares | The minority shareholders and the company | Section 236 |
| Company in winding up: liquidator's report | 281(1)(a) proviso | The company's assets, stated with their location and value | The Tribunal | Sections 281-282 |
| Revalued property, plant and equipment | Schedule III | Not a trigger: the company discloses whether the revaluation rests on a registered valuer's valuation | Readers of the financial statements | See article 003 for how asset values are adjusted |
Three points on reading this table.
First, section 62(1)(c) ties the price of the shares to the valuation report of a registered valuer, and the Act adds that other conditions may be prescribed. Section 192(2) requires the notice of the general meeting to include "the value of the assets involved in such arrangement duly calculated by a registered valuer". Section 236(2) requires an offer at a "price determined on the basis of valuation by a registered valuer", in accordance with the rules.
Second, in section 230(2)(c)(v) the valuation report sits inside the item on a corporate debt restructuring scheme consented to by the required secured creditors. Read the sub-section with its parent clause before assuming it applies to a plain scheme.
Third, this list is what the Act itself says at these places. Sweat equity, buy-back, reduction of capital and other transactions may carry a valuation requirement in the rules framed under the relevant section. For those, check the rules under that section, starting with the live post, for example section 54 on sweat equity.
The same word, three different valuations
| Companies Act | Income-tax | FEMA | |
|---|---|---|---|
| Who asks | The section of the Act that requires the valuation | The income-tax law and rules, when fair market value matters for tax | The pricing rules for shares issued to or transferred between residents and non-residents |
| Who values and how | A registered valuer under section 247 and the valuation rules | By the method the income-tax rules lay down | By the pricing rule applicable to the transaction |
| Where to read | The guides above | Rules 56 and 57: fair market value | Issue to non-residents and transfers and swaps |
Do not assume one report serves all three. A report may be reused as input only after someone has checked the basis, the date and the method against the other regime's rules. For income-tax questions, see our income-tax guides.
Worked example: a private company with two linked transactions
Alder Foods Private Limited (invented) plans two things in one financial year. It will issue 40,000 equity shares for cash to an outside investor who is a resident, and it will buy a godown from one of its directors, paying by allotting shares to him. The registered valuer's report, in this example, fixes the share price at an assumed ₹150 per share and the godown at an assumed ₹2,40,00,000.
| Step | Working | Result |
|---|---|---|
| Cash issue to the investor | 40,000 shares × ₹150 | ₹60,00,000 |
| Shares allotted to the director for the godown | ₹2,40,00,000 ÷ ₹150 | 1,60,000 shares |
| Total shares issued in the year | 40,000 + 1,60,000 | 2,00,000 shares |
| Total value of the two issues | ₹60,00,000 + ₹2,40,00,000 | ₹3,00,00,000 |
Which reports does the company need? The allotment to a chosen person at a price fixed by valuation is covered by section 62(1)(c), which also contemplates consideration other than cash, so a registered valuer's report on the share price supports both allotments. The godown deal is a non-cash arrangement with a director, so section 192 needs prior approval in general meeting, and the meeting notice must carry the value of the godown calculated by a registered valuer. The company therefore commissions two valuations by registered valuers: one of the shares and one of the godown. The Board, or the audit committee if there is one, appoints the valuer, who must have no interest in either asset. If the investor were a non-resident, the FEMA pricing rule would be checked separately; and for income-tax the company would check the tax rules on the same share price. The answer: two registered-valuer valuations, one general meeting resolution and one special resolution, with the tax and FEMA checks done separately.
Common mistakes
- Appointing the valuer by a director's request rather than by the audit committee or the Board.
- Using a valuer with an interest in the asset, or one who valued it within the three-year window.
- Dating the report so far from the allotment or the meeting that it no longer reflects the position.
- Using one report for the Companies Act, income-tax and FEMA without checking each basis.
- Treating the Schedule III revaluation disclosure as a requirement to obtain a registered valuer's report for revaluation.
How the common methods work is explained in DCF valuation, the net asset value method and comparable company multiples. Listed companies have further requirements, which are not covered here.
Need help with a valuation requirement?
If a share issue, a director transaction or a restructuring is on your calendar, the first task is to decide which valuations are needed, who appoints the valuer and in what order the approvals come. Our financial and legal due diligence team can map that sequence with you before the valuer is engaged.
Key takeaways
- Section 247 says the valuer is registered and is appointed by the audit committee or, in its absence, the Board.
- The Act names a registered valuer for a share issue to chosen persons, a non-cash deal with a director, a debt restructuring affidavit, a minority buy-out and a liquidator's report.
- A Schedule III revaluation note is a disclosure, not a trigger.
- Other transactions may need a valuation under the rules framed under their section.
- Companies Act, income-tax and FEMA valuations follow separate rules.
Read next
- Discounted cash flow (DCF) valuation of an unlisted company
- Net asset value method of business valuation
- Comparable company multiples method
- Section 247: registered valuers
Disclaimer: The figures, rates, multiples and names in the worked example are invented for illustration and are not market data. Where the article refers to law, it is based on the Companies Act, 2013 (MCA consolidated text) and the rules and live guides linked, as consulted on 6 October 2026; valuation for income-tax and FEMA purposes follows its own rules. This article is general information, not valuation, lending or legal advice; check the official text before acting.