Model Code of Conduct for Registered Valuers
Thirty short paragraphs that bind every registered valuer, whichever RVO they belong to.
Every registered valuer is bound by the Model Code of Conduct in Annexure I of the Registered Valuers Rules. Rule 7(g) makes compliance a condition of registration, and rule 12(2)(d) requires every RVO's own code to include all of it, so the same 30 paragraphs apply whichever RVO you belong to.
The code is short and specific. It bans success fees, convenience valuations and mandate snatching, restricts dealing in the subject company's securities, and sets a minimum period for keeping working papers. Exam questions quote it closely, so the exact wording matters.
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The Eight Heads of the Code
Integrity and fairness
Paras
1-5
The rules examiners pick
Honest and forthright dealing; no misrepresentation; keep public interest foremost
Professional competence and due care
Paras
6-11
The rules examiners pick
Independent judgement; keep skills current; no disclaiming liability for your own expertise; tell the client what you are competent to do
Independence and disclosure of interest
Paras
12-19
The rules examiners pick
No securities dealing; no mandate snatching or convenience valuations; no success fee; declare five years of association in fairness opinions
Confidentiality
Paras
20
The rules examiners pick
No use or disclosure of the subject company's confidential information without authority or a legal duty
Information management
Paras
21-24
The rules examiners pick
Contemporaneous records of decisions; cooperate with inspections; keep working papers
Gifts and hospitality
Paras
25-26
The rules examiners pick
No gifts that affect independence, for you or a relative; never offer one to win work
Remuneration and costs
Paras
27-28
The rules examiners pick
Transparent, reasonable fees; only fees disclosed in a written contract
Occupation, employability and restrictions
Paras
29-30
The rules examiners pick
Do not take on more work than you can give time to; no business that discredits the profession
| Head | Paras | The rules examiners pick |
|---|---|---|
| Integrity and fairness | 1-5 | Honest and forthright dealing; no misrepresentation; keep public interest foremost |
| Professional competence and due care | 6-11 | Independent judgement; keep skills current; no disclaiming liability for your own expertise; tell the client what you are competent to do |
| Independence and disclosure of interest | 12-19 | No securities dealing; no mandate snatching or convenience valuations; no success fee; declare five years of association in fairness opinions |
| Confidentiality | 20 | No use or disclosure of the subject company's confidential information without authority or a legal duty |
| Information management | 21-24 | Contemporaneous records of decisions; cooperate with inspections; keep working papers |
| Gifts and hospitality | 25-26 | No gifts that affect independence, for you or a relative; never offer one to win work |
| Remuneration and costs | 27-28 | Transparent, reasonable fees; only fees disclosed in a written contract |
| Occupation, employability and restrictions | 29-30 | Do not take on more work than you can give time to; no business that discredits the profession |
The Paragraphs That Carry Exact Rules
- Para 9: disclaimers
- A valuer may not disclaim liability for their expertise or deny a duty of care, except where assumptions rest on facts supplied by the company, its auditors or consultants, or on public information the valuer did not generate.
- Para 16: securities
- No dealing in the subject company's securities from the time the valuer first becomes aware of a possible association with the valuation, in line with the SEBI insider trading regulations, or until the report becomes public, whichever is earlier.
- Para 17 and 18: what independence rules out
- No 'mandate snatching' or 'convenience valuations' to suit a client's needs, and, as an independent valuer, no success fee.
- Para 19: fairness opinions
- If the valuer had a prior engagement in an unconnected transaction, the fairness or independent expert opinion must declare the association with the company during the last five years.
- Para 24: working papers
- Kept for three years, or longer if the contract requires, for regulators or peer review. If a case is pending before the Tribunal or Appellate Tribunal, kept until it is disposed of.
- Para 25: relative
- Gifts to a relative count. 'Relative' takes its meaning from section 2(77) of the Companies Act.
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Applying the Code: A Bank Mortgage Valuation
Illustration. A Land and Building valuer on a bank's panel is asked to value a Pune flat offered as security.
- 1
The borrower calls first
He says the loan needs a value of at least ₹1.2 crore and offers to 'take care of' the valuer. Agreeing would be a convenience valuation (para 17), and accepting anything is a gift that undermines independence (para 25).
- 2
The fee
The bank pays a fixed fee. A fee that rises if the loan is sanctioned would be a success fee (para 18), and any charge not in the written engagement is barred (para 28).
- 3
The report
The valuer relies on the society's share certificate supplied by the borrower. A caveat that the document was taken as given is allowed (para 9); a blanket disclaimer of the valuation itself is not.
- 4
Afterwards
Site photographs, sale instances and workings are kept for at least three years (para 24 and rule 7(f)), longer if the engagement letter says so or a case is pending.
How the Valuation Examination Tests This
The ethics module carries the same weight in both papers, and its questions are mostly short situations: 'which paragraph does this breach?' or 'is this allowed?'.
- check_circleSuccess fee: banned outright for an independent valuer, however it is labelled.
- check_circleSecurities: the restriction runs until the report becomes public or as the insider trading regulations require, whichever is earlier. Options saying 'for one year' or 'until registration' are invented.
- check_circleRetention: three years under the code and rule 7(f). ICAI Valuation Standard 202 says documentation is ordinarily kept not less than eight years. Read which source the question names.
- check_circleInterest: the three-year window before appointment and after valuation comes from section 247(2)(d) of the Act, not from the code.
FAQs
Can a registered valuer charge a success fee?expand_more
No. Paragraph 18 of the Model Code of Conduct says an independent valuer shall not charge a success fee.
What is a convenience valuation?expand_more
A valuation shaped to give the client the number it wants rather than an independent estimate. Paragraph 17 of the code bans it, along with 'mandate snatching'.
How long must a valuer keep working papers?expand_more
Three years, or longer if the contract for that valuation requires. If a case is pending before the Tribunal or Appellate Tribunal, until it is disposed of.
Can a valuer accept a gift from a client?expand_more
Not one that undermines or affects independence, and the rule covers the valuer's relatives too. A valuer must also never offer gifts or hospitality to obtain or keep work.
Next steps
- RV Rules 2017arrow_forward
- Section 247arrow_forward
- Report Writingarrow_forward
- Preparationarrow_forward
Timed and scored, with negative marking.