The Insolvency and Bankruptcy Board of India has notified guidelines regarding the use of Caveats, Limitations, and Disclaimers in Valuation Reports issued by Registered Valuers (RV). These guidelines shall come into force on or after October 01, 2020 and are in addition to Rule 8 of the Companies (Registered Valuers and Valuation) Rules, 2017 (Rules). RVs shall be required to prepare their reports in accordance with the guidelines as well as the Rule 8.
These guidelines have been formulated to ensure the credibility of the valuation reports and provide guidance to RVs in the use of Caveats, Limitations, and Disclaimers. The Guidelines also provide an illustrative list of the Caveats, Limitations, and Disclaimers which shall not be used in a valuation report.
The Guidelines provide for the following:
1. Contents of a valuation report
The following matters should be covered in the valuation reports in a clear, unambiguous and non-misleading manner, consistent with the need to maintain confidentiality:
- Background Information of the asset being valued;
- Purpose of valuation and appointing authority;
- Bases of Value;
- Premise of Value;
- Identity of the RV and any other experts involved in the valuation;
- Intended Users of the Valuation;
- Disclosure of RV interest or conflict, if any;
- Date of appointment, valuation date and date of report;
- Inspections and /or investigations undertaken;
- Business interest, ownership characteristics;
- Nature and sources of information;
- Significant Assumptions, if any;
- Procedures adopted in carrying out the valuation and valuation standards followed;
- Restrictions on use of report, if any;
- Major factors that were taken into account during valuation;
- Conclusion; and
- Caveats, limitations and disclaimers. Readmore..
Author: Surbhi Sharma