It is a document prepared by a certified Registered Valuer, that provides an assessment of the value of a particular asset or property. It is used in financial transactions, legal proceedings, taxation, or for other purposes where an accurate and independent valuation of the business and it’s shares is required.

In India, a Registered Valuer Report can only be issued by a Valuer who is certified by the Insolvency and Bankruptcy Board (IBBI).

In India, valuations are categorized into different sectors such as real estate, plant and machinery, securities or financial assets, and business or intangible assets, among others. Each category requires specialized knowledge and certifications to issue a Valuation Report.

To obtain a Registered Valuer Report, you need to engage a Registered Valuer who is authorized in the relevant category of valuation. The valuer will conduct the necessary assessments and prepare the report based on the specific requirements and purpose of the valuation.

The requirement for a Registered Valuer Report depends on the specific circumstances, legal and regulatory requirements, and the purpose of the valuation. For certain transactions or legal proceedings, obtaining a Registered Valuer Report may be mandatory.

A Registered Valuer Report should include details about the valuer’s credentials, scope of work, purpose of valuation, methodology used, market analysis, asset description, valuation assumptions, comparable sales data (if applicable), valuation results, and the valuer’s conclusion and opinion of value.

The validity of a Registered Valuer Report may vary depending on the purpose and nature of the valuation. In some cases, valuations may have a specific expiry date, while in others, the report may be considered valid until there are significant changes in market conditions or other relevant factors.

Yes, a Registered Valuer Report can be subject to review or challenge, especially if there are legitimate concerns about the methodology used, data inputs, or other relevant factors.

Engaging an unregistered valuer or using an invalid report may lead to legal and regulatory consequences. It may also affect the validity and acceptance of the valuation in financial, legal, or other contexts.

List of documents required for Valuation are:

• Provisional Financial Statement of the Company as on Valuation Date
• Last two years Audited Financials of the Company
• Next five years financial projection 
• MOA & AOA/Constitutional documents of the Company
• Corporate profile of the company
• Shareholding pattern as on Valuation Date
• Date of appointment of Valuer
• Valuation date
• List of Directors as on Valuation date

Discounted Cash Flow Method (DCF) is widely used for the valuation of startups. This approach is used for estimating the enterprise value by calculating the present value of all future cash flows.

When a company issues equity shares or preference shares or CCD to any investor through private placement then a Valuation Report is mandatorily required as per provisions of the Companies Act 2013.

When the company issues equity shares to its existing shareholder or to new shareholders under Right Issue or Share Transfer then a Valuation Report is not required. Valuation report is also not required when the company raises funds through convertible notes.

Only a Registered Valuer certified by IBBI can issue the Valuation report.

A startup is required to obtain a Valuation Report under the following circumstances:

• Prior to issuing Equity shares, Partly or Optional or Compulsory Convertible Preference Share or Partly Optional or Compulsory Convertible Debentures.
• Prior to issuing shares other than cash.
• Prior to issuing Sweat Equity shares either for cash or for consideration other than cash.