Section 247 Companies Act 2013 - Valuation by Registered Valuers
Section 247 of the Companies Act, 2013 governs valuation by registered valuers where a valuation is required under the Act. It covers valuation of property, stocks, shares, debentures, securities, goodwill, other assets, the net worth of a company and its liabilities.
Meaning of registered valuer
Under the Companies (Registered Valuers and Valuation) Rules, 2017, a registered valuer is a valuer registered with the Registration Authority for carrying out valuation of assets belonging to the asset class or classes for which the valuer is registered. The Rules identify the Insolvency and Bankruptcy Board of India (IBBI) as the Registration Authority.
In practical terms, Section 247 does not permit a company simply to select any person to perform a statutory valuation. Where the Companies Act requires valuation under this provision, the valuation must be made through the prescribed registered-valuer framework.
Section 247(1): When valuation by a registered valuer is required
Where a valuation is required under the Companies Act, 2013 in respect of property, stocks, shares, debentures, securities, goodwill, other assets, the net worth of a company or its liabilities, the valuation must be carried out by a person having the prescribed qualifications and experience, registered as a valuer and meeting the applicable membership and other prescribed requirements.
The registered valuer is appointed by the audit committee. Where the company does not have an audit committee, the appointment is made by the Board of Directors.
Section 247(2): Duties and independence of the valuer
Section 247 places substantive professional duties on the person appointed as valuer. The valuer must:
- make an impartial, true and fair valuation of the assets required to be valued;
- exercise due diligence while performing the functions of a valuer;
- make the valuation in accordance with the prescribed rules; and
- avoid valuation of assets in which the valuer has a direct or indirect interest during the prohibited period.
Three-year independence requirement
Section 247(2)(d), as amended, prevents a valuer from undertaking valuation of an asset in which the valuer has a direct or indirect interest, or becomes interested, during the period of three years before appointment as valuer or three years after the valuation was conducted. This requirement is intended to protect the independence and objectivity of the valuation process.
Valuation standards and the 2017 Rules
The Companies (Registered Valuers and Valuation) Rules, 2017 prescribe the regulatory framework for registration and conduct of registered valuers. Rule 8 deals with conduct of valuation. The Rules require a registered valuer to comply with the applicable valuation standards; the Rules also contain the framework applicable pending notification or modification of standards by the Central Government.
The Rules should therefore be read together with Section 247 whenever a statutory valuation under the Companies Act is undertaken.
Section 247(3): Penalty and fraudulent contravention
The current text of Section 247(3) provides that a valuer who contravenes Section 247 or the rules made under it is liable to a penalty of Rs. 50,000.
If the contravention is committed with intent to defraud the company or its members, the proviso provides for imprisonment for a term which may extend to one year and a fine of not less than Rs. 1 lakh, which may extend to Rs. 5 lakh.
Section 247(4): Refund of remuneration and damages
Where a valuer is convicted under sub-section (3), Section 247(4) further provides that the valuer is liable to:
- refund to the company the remuneration received by the valuer; and
- pay damages to the company or any other person for loss arising from incorrect or misleading statements of particulars made in the valuation report.
Section 247 at a glance
| Provision | Subject | Key requirement |
|---|---|---|
| Section 247(1) | Appointment | Statutory valuation is to be performed through the registered-valuer framework; appointment is by the audit committee or, in its absence, the Board. |
| Section 247(2) | Duties | Impartial, true and fair valuation, due diligence, compliance with prescribed rules and independence from conflicting interests. |
| Section 247(3) | Contravention | Penalty of Rs. 50,000; fraudulent contravention can attract imprisonment and fine. |
| Section 247(4) | Consequences after conviction | Refund of remuneration and liability for damages caused by incorrect or misleading particulars. |
Important amendments reflected in Section 247
The statutory text records changes to the registered-valuer qualification framework with effect from 23 October 2017. Section 247(2)(d) was also amended with effect from 9 February 2018 to specify the three-year periods relating to a valuer's direct or indirect interest.
Importantly, the original page's statement that an ordinary contravention attracted a fine ranging from Rs. 25,000 to Rs. 1 lakh is no longer the current statutory wording. The present Section 247(3) states a penalty of Rs. 50,000.
2026 update to the registered valuer framework
IBBI's official legal-framework records show the Companies (Registered Valuers and Valuation) Amendment Rules, 2026, dated 1 June 2026. This is an amendment to the Rules governing the registered-valuer framework and should be checked along with the consolidated Rules when considering current eligibility, organisational or compliance requirements.
Frequently asked questions
Who can make a valuation under Section 247?
A person who satisfies the prescribed requirements and is registered as a valuer for the relevant asset class under the Companies (Registered Valuers and Valuation) Rules, 2017.
Who appoints the valuer?
The audit committee appoints the valuer. If the company has no audit committee, the Board of Directors makes the appointment.
Can a valuer value an asset in which the valuer has an interest?
No. Section 247(2)(d) imposes restrictions concerning direct or indirect interest, including the statutory three-year periods before appointment and after the valuation.
What is the penalty for contravention of Section 247?
For an ordinary contravention, the current statutory text provides a penalty of Rs. 50,000. A contravention committed with intent to defraud may attract the imprisonment and fine specified in the proviso to Section 247(3).
Last reviewed: 17 September 2026. This article is for general legal information. For a transaction or statutory filing, verify the current Act, Rules, notifications and applicable valuation requirements.