Shanghai Municipality, Administration of State-owned Asset Valuation Items Tentative Provisions

Promulgated: July 15 2004
Applicability: The Provisions apply to all types of enterprises and institutions in the municipality in possession of state-owned assets (hereafter, Possessing Work Units) (Article 2).

Main contents: Valuation shall be carried out on the relevant state-owned assets for Possessing Units engaging in any of the following activities: (1) restructuring in whole or in part to a limited liability company or company limited by shares; (2) issue of all kinds of domestic shares (A shares, etc.) in China; (3) mergers, division or liquidation; (4) change in equity ratio of state-owned shareholders of non-listed companies; (5) assignment of property rights; (6) involving transfer of asset ownership, such as asset transfer, swap and auction, etc.; (7) lease of assets in whole or in part to non-state owned work units; (8) repaying debts with non-monetary assets; (9) determination of the value of assets involved in legal proceedings; and (10) other matters that require valuation as stipulated by laws and administrative regulations (Article 3). Possessing Units engaging in any of the following activities may choose not to carry out valuation on the relevant state-owned assets: (1) assignment without consideration of enterprise assets in whole or in part subject to the approval of people's governments at all levels or state-owned assets supervision and administration departments; or (2) mergers, asset (property rights) transfers, swaps and assignment among wholly owned subsidiaries and institutions of wholly state-owned enterprises (Article 4). Possessing Units engaging in any of the following activities shall carry out valuation on relevant non-state-owned assets: (1) joint establishment of limited liability companies or companies limited by shares with non-state-owned work units where the non-state-owned work units inject non-monetary assets; (2) acquisition of non-state-owned assets or property rights; (3) swap of assets or property rights with non-state-owned work units; (4) acceptance of the use of non-monetary assets to repay debts by non-state-owned work units; or (5) other matters that require valuation as stipulated by laws and administrative regulations (Article 5). If the transaction price is lower than 90% of the valuation results, the transaction shall be suspended and may only proceed upon consent of the original approval authority of such economic activities (Article 12).
Related legislation: State Council, Supervision and Administration of Enterprise State-owned Assets Tentative Regulations, May 27 2003, CLP 2003 No6 p36; State Council General Office, Transmission of the «Ministry of Finance, Reform of the Executive Administration on State-owned Asset Valuation and Strengthening the Regulatory Work on Asset Valuation Opinion» Circular, Dec 28 2001, CLP 2002 No.4 p5 and Several Issues Concerning the Administration of State-owned Asset Valuation Provisions