Valuation Engagement Letter Template for Singapore

A Valuation Engagement Letter is a critical legal document that establishes the contractual relationship between you and your valuation professional in Singapore. This agreement defines the scope, methodology, and terms of engagement for independent valuation services, ensuring compliance with Singapore's regulatory framework and professional standards. Whether you need valuations for corporate transactions, financial reporting, or legal proceedings, this document protects both parties and sets clear expectations for the engagement.

When do you need this document?

You require a Valuation Engagement Letter whenever engaging professional valuation services in Singapore. This includes situations where independent directors need asset valuations for related party transactions under the Companies Act, when preparing financial statements requiring fair value measurements, or during mergers and acquisitions requiring independent business valuations. The document is also essential for legal disputes involving asset or business valuations, regulatory compliance requirements under the Securities and Futures Act, and when obtaining valuations for tax purposes or estate planning. Any formal valuation engagement with professional valuation firms or chartered accountants providing valuation services must be documented through this agreement.

Key legal considerations

The engagement letter must clearly define the subject matter being valued, whether it's shares, business interests, intangible assets, or real property. You should ensure the document specifies the valuation basis and methodology to be applied, such as fair value, market value, or going concern value. Professional indemnity insurance coverage and limitation of liability clauses are crucial for managing risk exposure. The letter should establish confidentiality obligations and restrictions on the use and distribution of the valuation report. You must also address potential conflicts of interest and ensure the valuer's independence meets regulatory requirements. The document should specify the qualifications and experience of the valuation team and confirm adherence to continuing professional development requirements.

Legal requirements in Singapore

Under Singapore law, valuation engagements must comply with the Singapore Standard on Valuation Services (SSVS) issued by the Singapore Institute of Surveyors and Valuers. The engagement letter must reference these professional standards and confirm the valuer's compliance. For corporate valuations involving listed companies or regulated entities, you must ensure compliance with the Securities and Futures Act and relevant MAS regulations. The Companies Act requires independent valuations for certain related party transactions, and the engagement letter must confirm the valuer's independence criteria. Professional valuers must be registered with appropriate professional bodies such as SISV or ISCA, and this qualification should be documented in the engagement letter. The document should also comply with International Valuation Standards where applicable and specify any departures from standard methodology.