Why India Carved Out a Separate Profession Just for Valuation

IBBI's own explanatory material states the position directly. A regulatory mechanism "to oversee the regulation and development of valuation profession and the professionals were non-existent" until the Companies (Registered Valuers and Valuation) Rules, 2017 were notified. Before that, "the profession, until then, was mostly unregulated or loosely regulated," and "different statutes requiring valuation also restricted the role to the prescription of indigenous requirements."

Each law wrote its own answer to who could value what, with no common competency bar behind any of it. That model is still standing today in FEMA, which never migrated to the new regime, covered in Cross-Border Share Pricing: Why FEMA Doesn't Recognise a Registered Valuer.

Confirmed directly against the Report of the Expert Committee on Company Law, chaired by Dr J. J. Irani, submitted in May 2005. Under the heading "Protection of Minority Interests," the Committee recommended: "There should be recognition of principle of valuation of shares through an independent valuer whenever company causes an exercise of merger/restructuring." Restated more specifically elsewhere: "Valuation of shares of companies involved in schemes of mergers and acquisition by independent registered valuers (rather than court appointed valuers) should be made mandatory."

It did not stop at "hire an independent valuer." It asked for two further things: "Valuation standards may also be developed on the lines of 'International Valuation Standards' issued by the International Valuation Standards Committee," and "Benchmarking of valuation techniques and Peer Review Mechanism for Valuers should also be provided for."

Both arrived twelve years later, nearly word for word. The IVS mandate is examined in What Valuation Standard Actually Governs an SFA Registered Valuer?, and the peer-review structure became the Registered Valuers Organisations that front-line regulate the profession today.

Where the recommendation physically sits in the report is the tell. It appears under "Protection of Minority Interests," not in a chapter on professional standards.

The Committee's concern was not that Chartered Accountants and merchant bankers valued badly. It was that a company's controlling shareholders, the same people proposing a merger or restructuring, had too much practical influence over who valued it, with a court-appointed valuer as the only existing check. The proposal replaced that with a professional whose accountability runs to the valuation itself rather than to whoever engaged them. The same logic runs through Merger Valuations: Conditional Under Company Law, Mandatory Under SEBI, the exact transaction type the Committee had in mind.

Section 247 of the Companies Act, 2013 gave the recommendation a statutory hook. The Rules were notified 18 October 2017, and the mandate became fully operative on 1 February 2019, from which date only a registered valuer can sign off a Companies Act or IBC valuation.

Almost the entire 2005 blueprint shows up intact: independent registered valuers rather than court-appointed ones, standards aligned to IVS, and a peer-review mechanism realised as the RVOs.

The Irani Committee reported in May 2005. The Insolvency and Bankruptcy Board of India did not exist until the Insolvency and Bankruptcy Code, 2016 created it, eleven years later. A 2005 report could not have named a regulator that would not exist for over a decade.

Section 247 is itself silent on who regulates. It says only that a valuer must be "registered as a valuer... in such manner, on such terms and conditions as may be prescribed," leaving the authority to be filled in by rule. Section 458 of the Companies Act, 2013 is the general delegation power that filled it, and, checked directly against the citation IBBI uses on its own orders, notification GSR 1316(E) dated 18 October 2017, issued under Section 458 read with Rule 2(1)(b) of the Valuation Rules, named IBBI as that authority.

The IBC's regulations already assumed a functioning registered valuer profession would exist to determine fair value and liquidation value for a corporate debtor, the mechanism traced in Fair Value vs. Liquidation Value: Two Numbers, Not One. But the Companies Act framework meant to produce that profession was still an empty shell in 2017, enacted and not yet operational. IBBI's Governing Board took the view that it should regulate valuation professionals under the Code read with the Companies Act, since the Code's own machinery could not function without them. The Ministry of Corporate Affairs agreed and delegated accordingly.

The Committee's real contribution here is subtler, and arguably more interesting. Elsewhere in the same 2005 report, in the chapter on rehabilitation and winding up: "Law should encourage and recognize the concept of Insolvency Practitioners (Administrators, Liquidators, Turnaround Specialists, Valuers etc). Greater responsibility and authority should be given to Insolvency Practitioners under the supervision of the Tribunal."

Valuers are named inside that sentence, grouped with the professional family the IBC would eventually build IBBI to regulate. The report never says "let the insolvency regulator run valuers too." It did not need to. It had already stopped treating them as separate professions to plan for separately, eleven years before an institution existed to make the convergence literal.

Read the credential as an independence requirement, and let that decide the harder questions. When a client asks why their existing auditor or banker cannot sign the valuation, the answer is not that the credential is missing. It is that the framework was built to separate the valuation from the people proposing the transaction.

It also sets expectations about where the regime will and will not reach. FEMA still runs the pre-2017 model, live, today, and nothing about the 2017 reform obliges it to change. Company law's answer is fourteen years old, and the choice of regulator was less a plan executed on schedule than a 2005 conceptual pairing that a 2016 institution, built for an unrelated purpose but a related professional family, happened to be positioned to complete.