Where Company Law Actually Requires a Registered Valuer

Three are legal, one is evidentiary.

• Unconditional. An expert report qualified by "if any" does not count.
• Named. The words must require a registered valuer, not merely a valuation.
• In scope. The subject must be securities, financial assets, a business or net worth, so a land or plant valuation is out even where a valuer is named.
• Verified against the rule itself. Several further provisions appear to belong here: the non-cash transactions with directors provision, the winding-up proviso requiring valuation from registered valuers in the plural, the corporate debt restructuring limb of Section 230, and the three-fourths takeover route added in 2020. Each was checked only against reproductions of the text, so none is asserted.

Note also that the requirement usually sits in a rule rather than the section, which is why a section number alone is a poor guide to any of this.

• Preferential allotment. Rule 13(2)(g) of the Companies (Share Capital and Debentures) Rules, 2014: the price "shall be determined on the basis of valuation report of a registered valuer." A second proviso to Rule 13(1) carves listed companies out entirely, covered in A Listed Share Escapes the Registered Valuer Only When It Actually Trades.
• Sweat equity, the shares themselves. Rule 8(6): valued "at a price determined by a registered valuer as the fair price giving justification for such valuation."
• Employee share purchase in an unlisted company. Rule 16(1)(c): "where shares of a company are not listed on a recognized stock exchange, the valuation at which shares are to be purchased shall be made by a registered valuer." The quietest of the four, and the least often cited.
• Squeeze-out. Rule 27 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016: "the registered valuer shall determine the price (hereinafter called as offer price) to be paid by the acquirer." For a listed company SEBI's formula determines it and the valuer only justifies it, examined in A Squeeze-Out Valuer Sets the Price. Unless the Company Is Listed..

A fifth sits in the same rule as the first. Rule 13(2)(i) puts the valuation of non-cash consideration on a registered valuer too, whatever that consideration happens to be, which makes it a valuer requirement with no fixed asset class behind it.

Rule 8(7) mandates a registered valuer's report on the intellectual property, know-how or value additions that sweat equity is issued for. Annexure IV of the Companies (Registered Valuers and Valuation) Rules, 2017 offers three asset classes and none of them is intangibles, examined in Rule 8(7) Requires a Valuer for IP. No Asset Class Covers It..

It belongs on the map, and there is nowhere on the register to put it.

Checked by searching the full text of the rules rather than inferred from silence:

• Buy-back. No valuer mandate on either side of the listed divide, covered in Share Buy-backs: The One Mechanism With No Valuer Mandate At All. Rule 17(1)(n) requires an auditors' report that the permissible capital payment "is in their view properly determined," a quantum and solvency check, not an opinion on price.
• ESOP. Rule 12 names nobody.
• Debentures. Rule 18 names nobody.
• Dissenting shareholders under a scheme. Rule 26 requires notice in Form CAA.14 and nothing else: no valuer, no price mechanism, no parameters.
• Private placement. The Companies (Prospectus and Allotment of Securities) Rules, 2014 mention a valuer in exactly one place, and it is not here.

The mandate became fully operative on 1 February 2019, the date set by Rule 11 of the Valuation Rules, until which anyone already rendering valuation services could continue without registration. The Explanation to Rule 12(7) of the Prospectus and Allotment of Securities Rules is the securities-specific bridge: "Pending notification of sub-section (1) of section 247 of the Act and finalisation of qualifications and experience of valuers, valuation of stocks, shares, debentures, securities etc. shall be conducted by an independent merchant banker who is registered with the Securities and Exchange Board of India or an independent chartered accountant in practice having a minimum experience of ten years." Rule 6 of the CAA Rules carries materially the same formula for schemes.

Two things follow. Neither bridge named a Cost Accountant or a Company Secretary, though membership of ICMAI or ICSI qualifies a person for the Securities or Financial Assets class today, and both named a merchant banker, whom Annexure IV drops altogether. The 2017 regime did not consolidate the professionals company law had been using. It admitted two it had excluded and dropped one it had relied on.

The Share Capital and Debentures Rules carried no bridge at all. The string "247" does not occur anywhere in them, so Rule 13(2)(g) and Rule 8(6) have demanded a "registered valuer" since 1 April 2014, through nearly five years in which no such person could exist.

Check the rule, not the section, and do not assume a valuer is needed because the transaction feels significant. Four unconditional requirements, one attached to whatever non-cash consideration happens to be, one naming a class the register does not offer, and a longer list of well-known transactions requiring nobody.

The pattern behind the confirmed entries is more useful than the count. Each is a transaction where somebody is priced without having agreed the price: a preferential allotment dilutes shareholders who are not part of it, sweat equity issues shares for something other than cash, an unlisted employee share purchase has no market to refer to, and a squeeze-out is compulsory by definition.

Where the affected party can simply decline, as in a buy-back, the mandate disappears. The register exists for the transactions where consent does not.