Report of the Committee of Experts to Examine the Need for An Institutional Framework for Regulation and Development of Valuation Professionals
The Ministry of Corporate Affairs had constituted an eight-member Committee of Experts to examine the need for an institutional framework and development of valuation professions, under the Chairpersonship of Shri M. S. Sahoo, Chairperson, Insolvency and Bankruptcy Board of India (IBBI) on 30th August 2019
Based on comprehensive study and analysis of all relevant issues and taking the inputs of key stakeholders, the Committee has submitted its report to the Government of India on 31st March 2020 along with Draft Valuers Bill, 2020, recommending to establish a National Institute of Valuers.
The Draft Valuers Bill, 2020 is available in Volume I of the Report of the Committee of Experts.
The Complete Report (Volume I, II & III) can be accessed at the link A copy of the Report of Committee of Experts is available at the link http://www.mca.gov.in/Ministry/pdf/Notice_14042020.pdf.
The valuation profession is a very important institution for market economies. Valuation services are required for transactions under several enactments and market-based arrangements (such as mergers, acquisitions, commercial agreements, etc.). Regulating these services appropriately is crucial for ensuring standardization of practices and reducing commercial uncertainties. However, valuation professionals and the market for valuation services are largely unregulated, which creates several arbitrage opportunities.
In order to fill this lacuna, the government had constituted a committee in September 2019 to examine the need for an institutional framework for regulation and development of the valuation profession in India. It submitted its report along with a draft bill in April 2020.
The primary objectives of the proposed Bill are the development and regulation of the valuation profession and the market for valuation services in India. It also seeks to protect the users of such services.
The Bill provides for a two-tier model for the regulatory governance of the profession. It provides for the establishment of the National Institute of Valuers (NIV) as the principal regulator, and recognition of Valuer Professional Organisations to act as frontline regulators, which shall be primarily responsible for the development of the profession. The Bill envisages specialized educational courses along with a mandatory internship for entry into the profession. These courses are to be delivered by Valuers Institutes, registered with the NIV. The examinations for these courses are also to be conducted by NIV.