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Print articleChina: Valuation of Intellectual Property Rights
January, 2007 -
The Ministry of Finance and State Intellectual Property Office jointly issued the Notice of on Several Issues Concerning Strengthening the Administration on Asset Valuation in Connection with Intellectual Property Rights on 19 April 2006.
Mandatory valuation
The Notice clarifies the circumstances in which an assets valuation of intellectual property rights (“IP rights”) is to be conducted. The circumstances are:
• a limited liability company or company limited by shares is established with capital contributions made in the form of valuated IP rights;
• IP rights to be used as a pledge have no reference price in the market and the pledgee demands a valuation;
• the auctioning, transfer or substitution of IP rights by administrative work units;
• the restructuring, merger, division, liquidation, investment, assignment, substitution and auctioning by a state-owned institution involves IP rights;
• the restructuring, listing, merger, division, liquidation, investments, assignment, substitution, auctioning and repayments of debts by a state-owned enterprise involves IP rights;
• a state-owned enterprise obtains IP rights of a non-state owned work unit through acquisition or substitution or receives a capital contribution in the form of IP rights from a non-state owned work unit;
• a state-owned enterprise licenses its IP rights to a foreign company, enterprise, other economic organisation or individual and there is no reference price in the market;
• a people's court, arbitration authority or the parties demand a valuation to determine the value of litigation involving IP rights; and
• other circumstances requiring asset valuation as prescribed in laws and administrative regulations.
If non-state owned work units carry out a merger, division, liquidation, investment, assignment, substitution or debt repayment that involves IP rights, they may choose to conduct an asset valuation with reference to that of state-owned enterprises.
Asset valuation of IP rights shall be carried out by asset valuation organisations that have been approved by the Ministry of Finance.
Mandatory valuation
The Notice clarifies the circumstances in which an assets valuation of intellectual property rights (“IP rights”) is to be conducted. The circumstances are:
• a limited liability company or company limited by shares is established with capital contributions made in the form of valuated IP rights;
• IP rights to be used as a pledge have no reference price in the market and the pledgee demands a valuation;
• the auctioning, transfer or substitution of IP rights by administrative work units;
• the restructuring, merger, division, liquidation, investment, assignment, substitution and auctioning by a state-owned institution involves IP rights;
• the restructuring, listing, merger, division, liquidation, investments, assignment, substitution, auctioning and repayments of debts by a state-owned enterprise involves IP rights;
• a state-owned enterprise obtains IP rights of a non-state owned work unit through acquisition or substitution or receives a capital contribution in the form of IP rights from a non-state owned work unit;
• a state-owned enterprise licenses its IP rights to a foreign company, enterprise, other economic organisation or individual and there is no reference price in the market;
• a people's court, arbitration authority or the parties demand a valuation to determine the value of litigation involving IP rights; and
• other circumstances requiring asset valuation as prescribed in laws and administrative regulations.
If non-state owned work units carry out a merger, division, liquidation, investment, assignment, substitution or debt repayment that involves IP rights, they may choose to conduct an asset valuation with reference to that of state-owned enterprises.
Asset valuation of IP rights shall be carried out by asset valuation organisations that have been approved by the Ministry of Finance.
