Section 247 of the Companies Act: Valuation by Registered Valuers
Where the Companies Act needs a value, only a registered valuer appointed by the audit committee can give it.
Section 247 of the Companies Act, 2013 is the reason the registered valuer exists. Where the Act requires a valuation of any property, stocks, shares, debentures, securities, goodwill or any other asset, or of a company's net worth or liabilities, only a registered valuer may do it, and the audit committee (or, if there is none, the Board) must appoint them.
Its four sub-sections cover who values, the valuer's duties, the penalty and the consequences of conviction. The Registered Valuers Rules, 2017 are made under it, and both papers test it.
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What Each Sub-section Says
- Section 247(1): who values and who appoints
- A person with the prescribed qualifications and experience, registered as a valuer and a member of a recognised organisation (an RVO), appointed by the audit committee or, in its absence, the Board of Directors of that company.
- Section 247(2): four duties
- (a) Make an impartial, true and fair valuation. (b) Exercise due diligence. (c) Value in accordance with the prescribed rules. (d) Not value any asset in which the valuer has a direct or indirect interest, or becomes interested at any time during the three years before appointment or the three years after the valuation.
- Section 247(3): penalty
- A valuer who contravenes the section or the rules is liable to a penalty of ₹50,000. If the contravention was meant to defraud the company or its members, the punishment is imprisonment up to one year and a fine of ₹1 lakh to ₹5 lakh.
- Section 247(4): after conviction
- A valuer convicted under sub-section (3) must refund the remuneration to the company and pay damages to the company or any other person for loss caused by incorrect or misleading statements in the report.
Where the Act Calls for a Registered Valuer
Section 247 bites only where another provision of the Act requires a valuation. These are the main ones.
Section 62(1)(c)
Situation
Further issue of shares to any persons by special resolution, for cash or for consideration other than cash
What is valued
Price of the shares, set by a registered valuer's report
Section 192(2)
Situation
Non-cash transaction between a company and its director or a connected person
What is valued
Value of the assets involved, stated in the shareholder notice
Section 230(2)(c)(v)
Situation
Compromise or arrangement involving corporate debt restructuring
What is valued
Shares, property and all assets, tangible and intangible, movable and immovable
Section 236(2)
Situation
Acquirer holding 90% buying out the minority
What is valued
Price offered to minority shareholders
Section 281(1)(a), proviso
Situation
Company liquidator's report to the Tribunal in a winding up
What is valued
The company's assets
| Provision | Situation | What is valued |
|---|---|---|
| Section 62(1)(c) | Further issue of shares to any persons by special resolution, for cash or for consideration other than cash | Price of the shares, set by a registered valuer's report |
| Section 192(2) | Non-cash transaction between a company and its director or a connected person | Value of the assets involved, stated in the shareholder notice |
| Section 230(2)(c)(v) | Compromise or arrangement involving corporate debt restructuring | Shares, property and all assets, tangible and intangible, movable and immovable |
| Section 236(2) | Acquirer holding 90% buying out the minority | Price offered to minority shareholders |
| Section 281(1)(a), proviso | Company liquidator's report to the Tribunal in a winding up | The company's assets |
Valuations Under Other Laws
Rule 1(3) applies the Registered Valuers Rules to valuations under the Companies Act and the Rules themselves. Its Explanation says valuations under any other law are not affected. Whether an Income-tax, SEBI, FEMA or bank valuation needs a registered valuer depends on that law or regulator, not on section 247. Valuations under the IBC regulations do require one, because those regulations say so.
How the Valuation Examination Tests This
Section 247 sits in the law modules of both papers (the Phase 6 syllabus lists it alongside sections 192(2), 230-232 and 281(1) for Land and Building). The exam reads the law as it stood on 30 June 2026; section 247 has not changed since 2021, so that is also the position today.
- check_circleWho appoints: audit committee first, Board only if there is no audit committee. Options naming shareholders, the auditor or the managing director are wrong.
- check_circleThe interest window: three years before appointment and three years after the valuation. Candidates who learnt the pre-2018 text ('during or after the valuation') get this wrong.
- check_circlePenalty versus punishment: since 24 March 2021 an ordinary contravention attracts a ₹50,000 penalty. Imprisonment applies only with intent to defraud.
- check_circleSection 232(2)(d) refers to 'the report of the expert with regard to valuation, if any'. An exam option claiming it names a registered valuer is reading in words that are not there.
FAQs
Who appoints a registered valuer under section 247?expand_more
The audit committee of the company. If the company has no audit committee, the Board of Directors appoints the valuer.
What is the penalty for a registered valuer under section 247?expand_more
A penalty of ₹50,000 for a contravention of the section or the rules. If the valuer intended to defraud the company or its members, imprisonment up to one year and a fine of ₹1 lakh to ₹5 lakh, plus refund of fees and damages after conviction.
Can a valuer value an asset they had an interest in?expand_more
No. Section 247(2)(d) bars valuing any asset in which the valuer has a direct or indirect interest, or had one in the three years before appointment, or acquires one in the three years after the valuation.
Does section 247 apply to income-tax valuations?expand_more
Not by itself. Section 247 covers valuations required under the Companies Act. Rule 1(3) of the Registered Valuers Rules says valuations under other laws are not affected; those laws set their own requirements.
Next steps
- RV Rules 2017arrow_forward
- Code of Conductarrow_forward
- Merger Valuationarrow_forward
- Syllabusarrow_forward
Timed and scored, with negative marking.