Why India Carved Out a Separate Profession Just for Valuation

IBBI's own explanatory material states the pre-2017 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 separate answer to who could value what, with no common competency bar behind any of it, covered in Cross-Border Share Pricing: Why FEMA Doesn't Recognise a Registered Valuer, which is that exact pre-2017 model, still standing today, because FEMA never migrated to the new regime at all.

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 in the report: "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."

The Committee did not stop at "hire an independent valuer." It sketched out most of the infrastructure that eventually arrived twelve years later: "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." The eventual IVS mandate covered in What Valuation Standard Actually Governs an SFA Registered Valuer? and the RVO peer-review structure that governs registered valuers today are both, nearly word for word, what this report asked for in 2005.

Worth noticing where this recommendation physically sits in the report: not in a chapter about professional standards, but under "Protection of Minority Interests." The Committee's concern was not that Chartered Accountants and merchant bankers were bad at valuation. It was that a company's controlling shareholders, the same people proposing a merger or restructuring, had too much practical influence over who got to value it, with a court-appointed valuer as the only existing check. The report proposed replacing that with a professional whose accountability runs to the valuation itself, not to whoever engaged them. This is the same "who is the law actually protecting" logic that runs through Merger Valuations: Conditional Under Company Law, Mandatory Under SEBI, the exact transaction type the Irani Committee had in mind.

Section 247 of the Companies Act, 2013 gave the recommendation a statutory hook. The Companies (Registered Valuers and Valuation) 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, valuation standards aligned to IVS, and a peer-review mechanism, realised as the Registered Valuers Organisations that now function as front-line regulators for the profession.

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

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

What actually drove that choice, on the documented record, was IBBI's own operational need, not a committee recommendation at all. The IBC's own regulations already assumed a functioning registered valuer profession would exist to determine fair value and liquidation value for a corporate debtor, the mechanism covered in Fair Value vs. Liquidation Value: Two Numbers, Not One. But the Companies Act 2013 framework meant to produce that profession was still an empty shell in 2017, enacted but not yet operational. IBBI's own Governing Board felt it should be the one to 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 the Section 247 authority to IBBI accordingly.

The Irani Committee's real contribution here is subtler than a direct recommendation, and arguably more interesting. Elsewhere in the same 2005 report, in the chapter on rehabilitation and winding up, the Committee wrote: "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 directly inside that sentence, grouped with the same professional family, insolvency administrators and liquidators, that 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 that convergence literal.

The registered valuer credential is not paperwork layered on top of what Chartered Accountants and merchant bankers were already doing well. It is a specific, documented answer to a specific, documented complaint: no common competency bar, no common standard, and no independence check built into who got to value a transaction for the people proposing it. FEMA is what the old answer to that problem still looks like, live, today. Company law's answer is fourteen years old now, 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 well positioned to complete.