Asset Appraisal Law of the People's Republic of China

Order of the President No.46

July 2, 2016

The Asset Appraisal Law of the People's Republic of China, adopted at the 21st Session of the Standing Committee of the Twelfth National People's Congress of the People's Republic of China on July 2, 2016, is hereby promulgated and shall come into force as of December 1, 2016.

President of the People's Republic of China Xi Jinping

Asset Appraisal Law of the People's Republic of China

(Adopted at the 21st Meeting of the Standing Committee of the Twelfth National People's Congress on July 2, 2016)

Contents
Chapter I General Provisions
Chapter II Appraisal Professionals
Chapter III Appraisal Institutions
Chapter IV Appraisal Procedures
Chapter V Industry Associations
Chapter VI Supervision and Administration
Chapter VII Legal Liabilities
Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1 This Law is formulated for the purpose of regulating asset appraisal acts, protecting the legitimate rights and interests of the parties involved in an asset appraisal as well as the public interest, promoting the healthy development of the asset appraisal industry and maintaining the socialist market economy order.

Article 2 The term "asset appraisal" (hereinafter referred to as the "appraisal") as mentioned in this Law refers to professional services in which an appraisal institution and its appraisal professionals, as entrusted, evaluate and estimate the values of immovable, movables, intangible assets, enterprise values, asset losses or other economic interests and produce an appraisal report.

Article 3 Any natural person, legal person or other institution that needs to determine the value of an appraisal object may entrust an appraisal institution to conduct appraisal on a voluntary basis.
With regard to matters involving state-owned assets or the public interest, an appraisal is required by laws and administrative regulations (hereinafter referred to as the "statutory appraisal"), an appraisal institution shall be entrusted to conduct appraisal.

Article 4 An appraisal institution and its appraisal professionals shall conduct business in accordance with laws, administrative regulations and appraisal standards, and follow the principles of independence, objectivity and impartiality.
Appraisal institutions and their appraisal professionals that carry out appraisal according to the law shall be protected by law.

Article 5 Any appraisal professional shall join an appraisal institution to conduct appraisal and may only practice appraisal in one appraisal institution.

Article 6 The appraisal industry may lawfully establish the appraisal industry associations according to the fields of specialty, conduct self-disciplinary management, and accept the supervision of relevant appraisal administrative departments and the public.

Article 7 Relevant appraisal administrative department of the State Council shall conduct supervision and administration over the appraisal industry according to their respective responsibilities and functions.
Relevant appraisal administrative departments of the local people's governments at or above a city divided into districts shall conduct supervision and administration over the appraisal industry within their respective administrative regions according to their respective responsibilities and functions.

Chapter II Appraisal Professionals

Article 8 Appraising professionals include appraisers and other appraisal practitioners with the appraisal-related expertise and practical experience.
Appraisers refer to appraisal professionals that have passed appraisers qualification examination. The State shall determine the specialties of appraisers based on the needs of economic and social development.

Article 9 Relevant appraisal industry association at the national level shall carry out the national uniform examination for appraiser qualification according to the State provisions.
Citizens that have an education background of junior college or above may take part in the national uniform examination for appraiser qualification.

Article 10 Relevant appraisal industry association at the national level shall publish the list of appraisers on its official website and update the same in real time.

Article 11 If a person has been given a criminal punishment due to an intentional crime or a crime of negligence in appraisal, finance, accounting, and auditing activities, such person shall not conduct appraisal business until five years have passed since the completion of your sentence.

Article 12 Appraisal professionals shall enjoy the following rights:
1. The right to request the principal to provide relevant ownership certificates, financial and accounting information and other materials, and to provide assistance necessary for the implementation of fair appraising procedures;
2. The right to lawfully access to documents, certifications and materials required for appraising business in relevant state organs or other institutions;
3. The right to refuse the unlawful interference by the principal, or any other organization or individual in the appraisal or appraising results;
4. The right to sign an appraisal report according to the law; and
5. Other rights stipulated by laws and administrative regulations.

Article 13 Appraisal professionals shall fulfill the following obligations:
1. Being honest and trustworthy, and engaging in appraisal business independently, objectively and impartially according to the law;
2. Abiding by the appraisal standards, fulfilling the obligation of investigations, making analysis and estimates independently and conducting appraisal business diligently and prudently;
3. Completing required continuing education and maintaining and improving their professional competence;
4. Examining and verifying the authenticity, accuracy and integrity of relevant documents, certifications and materials used in appraising activities;
5. Ensuring the confidentiality of all state secrets, commercial secrets and privacy to which they are have accessed in appraisal activities;
6. Recusing themselves if they have a conflict of interest in the principal or other parties concerned and the appraisal object;
7. Accepting the self-disciplinary management of appraisal industry associations and fulfilling the obligations prescribed by the articles of association of appraisal industry associations; and
8. Other obligations stipulated by laws and administrative regulations.

Article 14 Appraisal professionals shall not commit any of the following acts:
1. Accepting entrustment in private to conduct appraisal business and charge fees;
2. Conducting appraisal business in two or more appraising institutions simultaneously;
3. Soliciting business by illicit means such as fraud, inducement, coercion or dispraising or disparaging other appraisal professionals;
4. Permitting any other person to conduct appraisal business in their name or conducting business in the name of other persons;
5. Signing the appraisal report on business that is not undertaken by them;
6. Soliciting, or accepting any remuneration or property not stipulated in the contract in a direct or disguised way, or seeking any illegitimate benefits;
7. Signing any false appraisal reports or appraisal reports having material omissions; or
8. Committing any other acts in violation of laws and administrative regulations.


Chapter III Appraisal Institutions

Article 15 Appraisal institutions shall be established in the form of partnership or corporation and employ appraisal professionals to conduct appraisal business.
An appraisal institution of the partnership form shall have two or more appraisers, and two thirds or more of its partners shall be appraisers who have more than three years of experience in the appraisal industry and have not been imposed the punishment of suspending practice in the last three years.
An appraisal institution of the corporate form shall have eight or more appraisers, and two or more shareholders, and two thirds or more of its shareholders shall be appraisers who have more than three years of experience in the appraisal industry and have not been imposed the punishment of suspending practice in the last three years.
Where an appraisal institution has two partners or shareholders, both of the partners or shareholders shall be appraisers who have more than three years of experience in the appraisal industry and have not been imposed the punishment of suspending practice in the last three years.


Article 16 The establishment of an appraisal institution shall be subject to registration with an administrative department for industry and commerce. The appraisal institution shall file a record with relevant administrative department of asset appraisal within 30 days of receiving the business license. The administrative department of asset appraisal shall announce to the public the record-filing of the appraisal institution in a timely manner.

Article 17 Any appraisal institution shall conduct appraisal business independently, objectively and impartially according to the law, and establish and improve the quality control system, and ensure the objectiveness, authenticity and rationality of appraisal reports.
Any appraisal institution shall establish and improve its internal management system, supervise its appraisal professionals' compliance with laws, administrative regulations and appraisal standards, and be accountable for their practice.
Any appraisal institution shall be subject to supervision and inspection according to the law and truthfully provide the appraisal records and other relevant information.

Article 18 Where the principal refuses to provide or provides false ownership certificates, financial and accounting information and other materials required for making the appraisal, the appraisal institution is entitled to refuse the principal's request for fulfillment of the contract according to the law.

Article 19 Where the principal requests to issue a false appraisal report or interferes in the appraisal results in other ways, the appraisal institution is entitled to dissolve the contract.

Article 20 Appraisal institutions shall not commit any of the following acts:
1. Taking advantage of the appraisal business to seek for illegitimate interests;
2. Permitting any other institutions to conduct appraisal business in their name or conducting business in the name of other institutions;
3. Soliciting business by illicit means including maliciously lowering price, paying commissions, making false publicity, or dispraising or disparaging other appraisal institutions;
4. Accepting an appraisal business which has a conflict of interest with them;
5. Accepting entrustment from both parties that have a conflict of interest and conducting appraisal on the same appraisal object;
6. Issuing false appraisal reports or appraisal reports having material omissions;
7. Employing or appointing any person that does not meet provisions stipulated herein to conduct appraisal; or
8. Committing any other acts in violation of laws and administrative regulations.


Article 21 Appraisal institutions may establish the occupational risk fund according to their business needs, or purchase occupational liability insurance voluntarily for the purpose of improving the risk prevent mechanism.

Chapter IV Appraisal Procedures

Article 22 The principal is entitled to choose an appraisal institution that meets the provisions stipulated herein on its own. Any entity or individual shall not unlawfully restrict or interfere in the principal's choice.
Where the appraisal matters involve two or more parties, an appraisal institution shall be entrusted based on the negotiation made by all parties concerned.
Where statutory appraisal business is conducted through entrustment, the appraisal institution shall be selected according to the law.

Article 23 The principal shall sign an entrustment contract with the appraisal institution to specify the rights and obligations of both parties.
The principal shall pay fees to the appraisal institution according to the entrustment contract, and shall not solicit or accept commission in a direct or disguised way.
The principal shall be liable for the authenticity, integrity and legality of the ownership certificates, financial and accounting information and other relevant materials provided it.

Article 24 For an appraisal case that has been accepted, an appraisal institution shall appoint at least two appraisal professionals to deal with such case.
The principal has the right to request for recusal of appraisal professionals that have a conflict of interest in the appraisal object.

Article 25 Appraisal professionals shall, depending on specific circumstances of the appraisal business, investigate the appraisal object on the spot, and collect, examine, verify, analyze and straighten out the ownership certificates, financial and accounting information and other materials which serves as the basis for the appraisal.

Article 26 Appraisal professionals shall select appraisal methods in an appropriate way. Except where only one appraisal method can be selected subject to the appraisal practicing rules, at least two appraisal methods shall be selected, and upon comprehensive analysis, they shall draw the appraisal conclusion and prepare the appraisal report.
Appraisal institutions shall conduct internal reviews of appraisal reports.

Article 27 An appraisal report shall be signed by at least two appraisal professionals who undertake the appraisal business and the official seal of the appraisal institution shall be affixed to the report.
The appraisal institution and its appraisal professionals shall be liable for the appraisal report produced by them according to the law.
The principal shall not collude with or instigate the appraisal institution or its appraisal professionals to issue any false appraisal report.

Article 28 To conduct statutory appraisal business, an appraisal institution shall appoint at least two appraisers with relevant specialty to undertake the appraisal. And the appraisal report shall be signed by at least two appraisers who undertake the appraisal business, and the official seal of the appraisal institution shall be affixed to the report.

Article 29 The appraisal records shall be retained for at least 15 years, and in case of statutory appraisal business, for at least 30 years.

Article 30 The principal who has raised an objection to the appraisal report may request the appraisal institution to make interpretations.

Article 31 The principal who believes that the appraisal institution or its appraisal professionals engage in appraisal illegally may make a complaint or report to relevant administrative departments of appraisal or to appraisal industry associations. Such administrative departments of appraisal or appraisal industry associations shall investigate and handle the complaint or report as soon as possible and give a reply to the principal.

Article 32 The principal or the user of an appraisal report shall use the appraisal report according to the provisions of the law within the scope of use clearly stated on the report.
Where the principal or the user of an appraisal report uses the appraisal report in violation of the preceding paragraph, the appraisal institution and its appraisal professionals shall not be liable for such use.

Chapter V Industry Associations

Article 33 Industry associations are self-disciplinary organizations for appraisal institutions and their appraisal professionals, and conduct self-disciplinary management according to laws, administrative regulations and articles of association.
The appraisal industry shall establish a national appraisal industry association according to the fields of specialty and set up local appraisal industry associations if necessary.

Article 34 Articles of association of appraisal industry associations shall be formulated by the member representative conference, and reported to the administrative authority for registration for examination and approval as well as the administrative departments of appraisal for record-filing.

Article 35 Appraisal institutions and their appraisers that join appraisal industry associations shall enjoy equal rights and fulfill the obligations provided in the articles of association. Relevant appraisal industry associations shall publish the list of appraisal institutions and appraisal g professionals that have joint such associations.

Article 36 Appraisal industry associations shall fulfill the following responsibilities and duties:
1. Formulating the self-disciplinary management rules for their members and conducting self-disciplinary management of their members;
2. Formulating the appraisal practice rules and code of professional ethics according to the fundamental appraisal standards;
3. Organizing the continuing education for their members;
4. Establishing member credit archives which shall include their compliance with laws, administrative regulations and appraisal standards and publishing the same to the public;
5. Inspecting their establishment of risk prevention mechanisms;
6. Accepting the complaints and report made against their members, accepting members' appeal, and mediating disputes related to members' practice;
7. Regulating their members' practice, inspecting the appraisal reports issued by the members on a regular basis, rewarding or punishing members according to their articles of association, and reporting the rewards and punishments to relevant appraisal administrative departments in a timely manner;
8. Safeguarding members' legal engagement in appraisal and protecting members' legitimate rights and interests; and
9. Performing other responsibilities stipulated by laws, administrative regulations and articles of association.


Article 37 Relevant appraisal industry associations shall establish a mechanism of coordination and cooperation as well as information sharing, and formulate a common code of conduct if necessary to foster the healthy and orderly development of the appraisal industry.

Article 38 The standard for charging membership fees of appraisal industry associations shall be approved by the member representative conference and be published to the public. The amount of membership fees paid by a member shall not be made a condition for him to hold a post in the industry association.
The charging and use of the membership fees shall be supervised by the member representative conference and relevant authorities, and no entity or individual may embezzle, divide privately or appropriate such fees.

Chapter VI Supervision and Administration

Article 39 Relevant appraisal administrative department of the State Council shall be responsible for formulating the fundamental appraisal standards and the measures for the supervision and administration of the appraisal industry.

Article 40 Relevant appraisal administrative departments of the local people's governments at or above a city divided into districts shall, according to their respective responsibilities and duties, be responsible for supervising and administrating the appraisal industry, impose administrative penalties for violations committed by appraisal institutions and appraisal professionals according to the law, inform relevant appraisal industry associations of the penalties in a timely manner and publish the same to the society according to the law.

Article 41 Administrative departments of appraisal shall conduct supervision and inspections on relevant appraisal industry associations. For any problems found in the inspections, or any complaints or report made against the industry associations, they shall investigate and handle them in time.

Article 42 Administrative departments of appraisal shall not, in violation of the provisions as stipulated herein, impose restrictions on the appraisal business legally conducted by appraisal institutions.

Article 43 Administrative departments of appraisal shall neither associate with appraisal industry associations or appraisal institutions in respect of personnel or funds, nor use their authority to solicit business for appraisal institutions.

Chapter VII Legal Liabilities

Article 44 Where appraisal professionals, in violation of the provisions stipulated herein, commit any of the following acts, relevant appraisal administrative departments shall give a warning and order them to suspend practice for more than six months and less than a year; and illegal gains, if any, shall be confiscated; where the case is serious, they shall be ordered to suspend practice for more than a year and less than five years; and where a crime is constituted, criminal liability shall be pursued in accordance with the law:
1. Accepting entrustment in private to conduct appraisal business and charge fees;
2. Conducting appraisal business in two or more appraisal institutions simultaneously;
3. Soliciting business by illicit means such as fraud, inducement, coercion or dispraising or disparaging other appraisal professionals;
4. Permitting any other person to conduct appraisal business in their name or conducting business in the name of others;
5. Signing the appraisal reports on a business that is not undertaken by themselves or appraisal reports having material omissions; or
6. Soliciting or accepting any remuneration or property not stipulated in the contract in a direct or disguised way, or seeking any illegitimate benefits.

Article 45 Where appraisal professionals, in violation of the provisions stipulated herein, sign any false appraisal reports, relevant appraisal administrative departments shall order them to suspend practice for more than two years and less than five years; illegal gains, if any, shall be confiscated; where the case is serious, they shall be ordered to suspend practice for more than five years and less than ten years; and where a crime is constituted, criminal liability shall be pursued in accordance with the law and they shall be permanently prohibited from conducting any appraisal business.

Article 46 Where an entity, in violation of the provisions stipulated herein, conducts appraisal business in the name of an appraisal institution without the industrial and commercial registration, administrative departments for industry and commerce shall order it to discontinue such violations; confiscate illegal gains, if any, and impose a penalty of one to five times the illegal gains.

Article 47 Where appraisal institutions, in violation of the provisions stipulated herein, commit any of the following acts, relevant appraisal administrative departments shall give a warning and order them to suspend operation for more than a month and less than six months; and illegal gains, if any, shall be confiscated and a penalty of one to five times the illegal gains shall be imposed; where the case is serious, administrative departments for industry and commerce shall revoke their business licenses; and where a crime is constituted, criminal liability shall be pursued in accordance with the law:
1. Taking advantage of the appraisal business to seek for illegitimate interest;
2. Permitting other institutions to conduct the appraisal business in their name or conducting business in the name of other institutions;
3. Soliciting business by illicit means including maliciously lowering price, paying commissions, making false publicity, or dispraising or disparaging other appraisal institutions;
4. Accepting an appraisal business which has a conflict of interest with them;
5. Accepting entrustment from both parties that have a conflict of interest and conducting appraisal on the same appraisal object;
6. Issuing an appraisal report that has material omissions;
7. Failing to retain the appraisal records for certain time of period as required by this Law;
8. Employing or appointing any person that does not meet provisions stipulated herein to conduct appraisal business; or
9. Mismanaging their respective appraisal professionals, leading to adverse consequences.
Where an appraisal institution fails to go through registration according to the provisions stipulated herein or does not meet the conditions mentioned in Article 15 herein, relevant appraisal administrative department shall order it to make rectification, or order it to suspend operation if it refuses to make rectification and may impose a penalty of more than CNY10,000 and less than CNY50,000.

Article 48 Where an appraisal institution, in violation of the provisions stipulated herein, issues a false appraisal report, relevant appraisal administrative department shall order it to suspend operation for more than six months and less than a year; and illegal gains, if any, shall be confiscated and a penalty of one to five times the illegal gains shall be imposed; where the case is serious, the administrative department for industry and commerce shall revoke its business license; and where a crime is constituted, criminal liability shall be pursued in accordance with the law .

Article 49 Where an appraisal institution or an appraisal professional receives three or more penalties accumulatively within one year, excluding being ordered to suspend operation or practice, relevant administrative department of asset appraisal may order it to suspend operation or practice for more than a year and less than five years.

Article 50 Where an appraisal professional, in violation of the provisions stipulated herein causes losses to the principal or other parties concerned, the appraisal institution for which he works shall be liable for the compensation in accordance with the law. Such appraisal institution, after fulfillment its liability of compensation, may claim recovery against such appraisal professional who has willful misconduct or gross negligence.

Article 51 Where an entity should have entrusted an appraisal institution to conduct a statutory appraisal but fails to do so, in violation of the provisions stipulated herein, relevant departments shall order it to make rectification, and if it refuses to do so, may impose a penalty of more than CNY100,000 and less than CNY500,000 ; where the case is serious, the persons directly in charge and other persons directly liable shall be punished according to the law; where losses are caused, the liability of compensation shall be assumed according to the law; and where a crime is constituted, criminal liability shall be pursued in accordance with the law.

Article 52 In a statutory appraisal, where the principal, in violation of the provisions stipulated herein, commits any of the following acts, relevant appraisal administrative department shall order it to make rectification in concert with other departments concerned; and a penalty of more than CNY100,000 and less than CNY500,000 shall be imposed if the principal refuses to make rectification;illegal gains, if any, shall be confiscated; where the case is serious, the persons directly in charge and other persons directly liable shall be punished according to the law; where losses are caused, the liability of compensation shall be assumed according to the law; and where a crime is constituted, criminal liability shall be pursued in accordance with the law.
1. Failing to select the appraisal institution according to the law;
2. Soliciting or accepting commission in a direct or disguised way;
3. Colluding with or instigating the appraisal institution or the appraisal professionals thereof to issue a false appraisal report;
4. Failing to provide truthful ownership certificates, financial and accounting information and other materials to the appraisal institution; or
5. Failing to use the appraisal report according to the provisions stipulated by law or the scope of use clearly indicated on the appraisal report.
Where the principal other than those stated in the preceding paragraph in violation of the provisions stipulated herein, causes losses to others, it shall be liable for compensation in accordance with the law.


Article 53 Where an appraisal industry association violates the provisions stipulated herein, relevant appraisal administrative department shall give a warning and order it to make rectification; if it refuses to do so, such department shall notify the administrative authority for registration that will be responsible for imposing penalties according to the law.

Article 54 Where the staff of relevant appraisal administrative departments or appraisal industry associations, in violation of the provisions stipulated herein, abuse power, neglect duties or engage in malpractices for personal gains, he shall be punished according to the law; and where a crime is constituted, criminal liability shall be pursued in accordance with the law.

Chapter VIII Supplementary Provisions

Article 55 This Law shall come into force as of December 1, 2016.