THE ROLE OF PROFESSIONAL VALUATION ORGANIZATIONS UNDER THE 2017 RULES

The Role of Professional Valuation Organizations Under the 2017 Rules

Introduction

The valuation profession in India experienced a significant transformation with the introduction of the Companies (Registered Valuers and Valuation) Rules, 2017. These rules were established to regulate valuation practices and ensure standardization, transparency, and credibility in valuations conducted for various purposes, including corporate transactions, financial reporting, and legal requirements.

Establishment and Recognition

Professional Valuation Organizations (PVOs) play a crucial role under the 2017 Rules. They are responsible for enrolling, training, and regulating valuers in India. The Insolvency and Bankruptcy Board of India (IBBI) is the apex body overseeing these organizations. PVOs must be registered with IBBI to operate legally and effectively.

Key Responsibilities of PVOs

1. Enrollment and Membership: PVOs are tasked with enrolling individuals who meet the eligibility criteria for becoming registered valuers. These criteria include educational qualifications, experience, and passing valuation examinations.
2. Training and Development: PVOs provide mandatory training and continuous professional development programs to ensure valuers stay updated with the latest valuation techniques, legal requirements, and industry standards.
3. Examinations and Certification: PVOs conduct examinations that aspiring valuers must pass to obtain certification. These examinations test the candidates’ knowledge and skills in valuation practices.
4. Standardization and Regulation: PVOs develop and enforce standards and codes of conduct for valuers. They ensure that valuations are carried out with integrity, objectivity, and professionalism.
5. Disciplinary Actions: PVOs have the authority to investigate complaints against valuers and take disciplinary actions, including suspension or cancellation of membership, to maintain the credibility of the profession.

Impact on the Valuation Profession

Enhanced Credibility and Trust: The establishment of PVOs and the stringent regulations under the 2017 Rules have significantly enhanced the credibility and trust in the valuation profession in India. Stakeholders, including investors, creditors, and regulators, now have greater confidence in the valuations provided by registered valuers.

Standardization of Practices: The 2017 Rules have brought about standardization in valuation practices. PVOs ensure that valuers adhere to uniform methodologies and ethical standards, leading to consistent and reliable valuation outcomes.

Professional Development: Continuous training and development programs offered by PVOs have raised the professional standards of valuers. This has resulted in a more skilled and knowledgeable workforce capable of handling complex valuation assignments.

Regulatory Compliance: Valuers, under the oversight of PVOs, are better equipped to comply with regulatory requirements. This compliance is crucial for corporate governance, financial reporting, and other legal purposes.

Challenges and Future Outlook

Implementation Challenges: While the 2017 Rules have set a robust framework, implementation remains a challenge. Ensuring uniform compliance across diverse sectors and regions requires continuous efforts from PVOs and regulatory bodies.

Evolving Standards

As the business environment evolves, valuation standards and practices must also adapt. PVOs need to be proactive in updating training programs and standards to keep pace with global best practices.

Expanding Scope

With the increasing complexity of financial markets and transactions, the scope of valuation services is expanding. PVOs must ensure that valuers are equipped to handle new and emerging areas of valuation.

Professional Valuation Organizations under the 2017 Rules have played a pivotal role in transforming the valuation profession in India. By ensuring standardization, credibility, and continuous professional development, PVOs have elevated the standards of valuation practices. Despite implementation challenges, the future of the valuation profession in India looks promising, with PVOs at the forefront of this positive change.