The Insolvency and Bankruptcy Board of India vide its notification dated 1st September 2020, has published the Insolvency and Bankruptcy Board of India (Use of Caveats, Limitations, and Disclaimers in Valuation Reports) Guidelines, 2020 which shall be in force in respect of valuation reports in respect of valuations completed by Registered Valuers (RVs) on or after 1st October 2020.
The Guidelines provide guidance to the registered valuers in the use of Caveats, Limitations, and Disclaimers in the interest of credibility of the valuation reports and they provide an illustrative list of the Caveats, Limitations, and Disclaimers which shall not be used in a valuation report.
A valuation report should not carry a disclaimer, which has the potential to dilute the responsibility of the RV or makes the valuation unsuitable for the purpose for which the valuation was conducted. The valuation reports should be capable of being tested through the crucible of legal evidence in judicial proceedings.
Considering the interests of stakeholders and the need for transparency and principles of good corporate governance, the under noted matters should compulsorily be covered in the Valuation Report, 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.
