Ministry of Finance and State Intellectual Property Office, Circular on Several Issues Concerning Strengthening the Administration on Asset Valuation in Connection with Intellectual Property Rights

Issued: April 19 2006
Applicability: After the issue of this Circular, in the event of a conflict between previous relevant provisions and this Circular, this Circular shall prevail (Article 7).

Main contents: The Circular requires that an asset valuation be carried out by work units possessing intellectual property rights (IPRs) if any of the following conditions is met:
(1) establishing limited liability companies or companies limited by shares with capital contributions made in the form of valuated IPRs in accordance with Article 27 of the Company Law;
(2) IPRs being taken as pledges where there is no reference price in the market and the pledgee requests for valuation;
(3) auctions, transfers or replacements of IPRs by administrative work units;
(4) restructurings, mergers, divisions, liquidations, investments, transfers, replacements and auctions of state-owned institutions involving IPRs;
(5) restructurings, listings, mergers, divisions, liquidations, investments, transfers, replacements, auctions and repayments of debts of state-owned enterprises involving IPRs;
(6) state-owned enterprises obtaining IPRs of non-state owned work units through acquisition or replacement, or accepting capital contributions in terms of IPRs by non-state owned work units;
(7) state-owned enterprises licensing their IPRs to foreign companies, enterprises, other economic organizations or individuals where there is no reference price in the market;
(8) in determination of the value of litigation involving IPRs and the people's court, arbitration authority or the parties concerned request for valuation; and
(9) other matters requiring asset valuation as stipulated by laws and administrative regulations.
Financial activities such as mergers, divisions, liquidations, investments, transfers, replacements, repayments of debts by non-state owned work units involving IPRs may have an asset valuation carried out with reference to that of state-owned enterprises (Article 1).
Related legislation: PRC Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p.21; PRC Patent Law (2nd Revision), Aug 25 2000, CLP 2000 No.8 p.7; PRC Trademark Law (2nd Revision), Oct 27 2001, CLP 2001 No.10 p.75; PRC Copyright Law (Revised), Oct 27 2001, CLP 2001 No.10 p.53; PRC Security Law, Jun 30 1995, CLP 1995 No.6 p.21 and Measures for the Administration of State-owned Asset Valuation