When Do You Actually Need an IBBI Registered Valuer?
"Can't we just get a CA to certify the value?" is a question I hear often — and the honest answer is: it depends entirely on what the valuation is for.
Where an IBBI Registered Valuer is mandatory
Under the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016, valuation by a Registered Valuer is required for situations including:
- Valuation of shares under Section 62 (further issue of share capital) and Section 247
- Valuation in mergers, demergers, and other schemes of arrangement
- Valuation for insolvency resolution and liquidation processes under the IBC
- Issuance of shares on preferential basis or conversion of instruments, in many cases
- Buy-back and other transactions where the Companies Act prescribes a registered valuer's report
If your transaction falls in one of these categories, an unregistered valuer's certificate — however well-reasoned — does not meet the legal requirement. This is the most common compliance gap I see when companies approach valuation as an afterthought.
Where it's a matter of credibility, not law
For internal decision-making, fundraising negotiations, ESOP pricing, or shareholder disputes that don't trigger a statutory filing, the law may not mandate an IBBI registered valuer. But credibility still matters:
- Investors and acquirers give more weight to a methodologically sound, IBBI-standard report
- Banks and NBFCs financing against share pledges increasingly expect registered-valuer rigor
- A defensible valuation reduces dispute risk if the transaction is challenged later
What a credible valuation of financial securities actually involves
Whether the instrument is equity, preference shares, debt, or a hybrid instrument, a defensible valuation report covers:
- Correct selection and justification of valuation approach — income, market, or asset approach (or a combination)
- Clearly stated assumptions, with sensitivity around the key ones
- Fair value conclusion that is internally consistent with the company's own financial statements and projections
- Documentation that would withstand scrutiny from auditors, tax authorities, or a tribunal
A practical rule of thumb
If the valuation feeds into a statutory filing, a regulatory process, or a transaction where a regulator or tribunal could later examine it — get an IBBI registered valuer involved from the start, not after a query is raised.
Where I help: As an IBBI Registered Valuer for financial securities, I prepare valuation reports for equity, preference, debt, and hybrid instruments — for statutory compliance as well as deal and fundraising support.
If you're unsure whether your situation requires a registered valuer's report, get in touch — it's a five-minute conversation that can save a much longer compliance headache later.