Rule 8(7) Requires a Valuer for IP. No Asset Class Covers It.

Rule 8(7) of the Companies (Share Capital and Debentures) Rules, 2014 is not conditional and does not leave the professional open: "The valuation of intellectual property rights or of know how or value additions ... shall be carried out by a registered valuer." It sits beside Rule 8(6), which requires a registered valuer to price the sweat equity shares themselves, the doubling-up covered in Sweat Equity Valuation: Where Company Law Actually Doubles Up. Two reports, two subjects, one named profession.

Annexure IV of the Companies (Registered Valuers and Valuation) Rules, 2017 registers valuers under exactly three asset classes: Land and Building, Plant and Machinery, and Securities or Financial Assets. Intellectual property is none of the three. The Annexure does anticipate growth, closing with "Any other asset class along with corresponding qualifications and experience in accordance with rule 4 as may be specified by the Central Government." That slot has never been filled. Eight years after the Rules were notified, the list is still three.

A missing category would be harmless if registration were permissive. It is not. Rule 7(c) makes registration a condition that a valuer shall "not conduct valuation of the assets or class(es) of assets other than for which he/it has been registered by the authority," the restriction examined in One Valuer, Two Registrations: Rule 8(2) Never Triggers. Every registered valuer holds one or more of three classes, none of which is intellectual property. On the face of the two rules read together, the valuer who signs a Rule 8(7) report is valuing an asset outside any class they hold, which is precisely what Rule 7(c) prohibits.

Market practice treats the Rule 8(7) valuation as falling within Securities or Financial Assets, which is what both ESOP Fair Valuation: Four Triggers, Four Different Rules and the sweat equity piece recorded, in each case flagged as practice rather than codified fact. The reasoning is one of elimination rather than fit: Land and Building and Plant and Machinery are plainly wrong, so the residual financial class absorbs it. That is a sensible working answer and it is not a textual one. Nothing in Annexure IV, Rule 2(1)'s definition of asset class, or the Securities or Financial Assets qualification criteria mentions intangibles, intellectual property, know-how, or brands.

The awkwardness is that the valuation profession itself has no difficulty with intangibles. ICAI Valuation Standard 302 is devoted to them, and the International Valuation Standards carry a dedicated intangible assets chapter, with named methods, relief from royalty and multi-period excess earnings among them, that this series has already catalogued in Valuation Approach vs. Valuation Method: What the Words Actually Mean. The methodology exists, is written down, and is taught. What does not exist is a register whose asset class matches the work.

A company issuing sweat equity for intellectual property must obtain a registered valuer's report on that intellectual property, and there is no asset class under which a valuer can be registered to give one. The requirement is real, the professional is named, the methodology is settled, and the credential does not exist. In practice a Securities or Financial Assets valuer signs it and nobody objects, which is the outcome the framework needs but not one its own text produces.

The fix is small and available: Annexure IV already contains the power to specify a further asset class, and the Central Government has simply never used it. Until it does, this is one of the few places in the framework where a mandatory valuation and the register of people permitted to perform it do not meet.