Use of Disclaimers, Limitations, and Caveats by the Registered Valuers in his Report: IBBI Issue Guidelines
The IBBI released guidance called India's Insolvency and Bankruptcy Board Guidelines (Use of Caveats, Limitations, and Disclaimers in Valuation Reports), 2020.
The guidance is issued pursuant to Rule 14(i) of the Companies Rules (Registered Valuers and Valuation) 2017, which specifies IBBI as the authority to establish and regulate the valuation profession.
The said Guidelines shall enter into force on or after 1 October 2020 with respect to valuation reports for valuations completed by Registered Valuers (RVs).
The aim of the said Guidelines is to provide guidelines to Registered Valuers on the use of Caveats, Limitations, and Disclaimers in the interest of the valuation reports being credible. These also provide an illustrative list of the Caveats, Limitations, and Disclaimers not to be used in a Valuation Report.
As provided in the guidance;
(i) In adherence to these Guidelines, Registered Valuers shall prepare valuation reports under Rule 8 of the Rules.
(ii) Registered Valuer Organisations shall monitor compliance with these Guidelines by scrutinizing the valuation reports.
Download Guidance: IBBI Guidelines issued for Registered Valuers
A valuation report should not contain a disclaimer that may reduce the RV responsibilities or make the valuation inappropriate for the purpose for which the valuation was conducted. The valuation reports should be capable of being tested in judicial proceedings through the crucible of valid evidence. The following statements can be regarded in a valuation report while supplying disclaimers. Could a Registered Valuers:
(A) classify the rights which he/she wishes to protect;
(B) focus on areas in which he/she could be held liable;
(C) make clear that the content of the valuation report relates to the company's specific use; and
(D) warn the viewer of any possible risks.
However, a disclaimer on its own will not be able to exclude the liability of Registered Valuers in the performance of duties as regards duties.
Even these Guidelines are divided into three sections. The first section of a valuation report elaborates on the need for Caveats, Limitations, and Disclaimers. The second section provides a guidance note on the use of Caveats, Limitations, and Disclaimers whilst the third section provides an illustrative list of Caveats, Limitations, and Disclaimers for each asset class provided in the regulations.
Update Notes IBBI :
Important announcement by IBBI relating to LIE and valuation examination. Cooling of period of 2 months applicable between 2 attempts (maximum 6 attempts in 12 months). To be implemented after expiry of 3 months from today.