A registered valuer’s report is the evidentiary foundation for a corporate action that requires a valuation. The report must comply with the valuation standards, and it must disclose the methodology, the assumptions, the data, and the limitations. A report that is not supported by the standards is vulnerable to challenge before the NCLT.
The Contents
The report must identify the asset or the business being valued, the valuation date, the purpose of the valuation, the standard of value, and the valuation methodology. It must describe the company’s business, its financial position, its prospects, and the material contingencies. It must explain the choice of the methodology and the assumptions, and it must reconcile the valuation with the financial statements.
The Methodologies
The income approach values the business by discounting the expected future cash flows to the present value. The market approach values the business by reference to comparable companies or comparable transactions. The asset-based approach values the business by reference to the fair value of its assets and liabilities. The valuer must select the methodology that is appropriate to the business, and it must explain why the other methodologies were not adopted.
The Challenge
The report can be challenged on three grounds: the valuer’s independence, the methodology, and the assumptions. The NCLT examines whether the valuer was qualified and independent, whether the methodology was appropriate, and whether the assumptions were supported by the company’s financial data. The Tribunal does not substitute its own valuation, but it will reject a report that is perverse or based on a demonstrable error.
A technically sound report anticipates the challenge. It discloses the methodology, the assumptions, and the limitations, and it explains why the chosen approach is the most appropriate.
Call to Action
Anuj Desai & Associates coordinates registered valuer reports for NCLT schemes and corporate actions—from the scope and the methodology to the review and the defence of the report before the Tribunal. If your valuation is being challenged, we can help you build the record.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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