China's Ministry of Finance, together with the National Financial Regulatory Administration, the China National Intellectual Property Administration and the National Copyright Administration, issued a notice to further standardise the valuation of intellectual property (IP) assets, setting expectations for valuation firms’ professional conduct and strengthening supervisory and self-regulatory arrangements, including where valuations support IP pledge financing. The notice reiterates that IP valuations undertaken as part of IP operation and commercialisation should follow applicable laws and administrative regulations, while allowing parties to commission voluntary valuations outside statutory circumstances, subject to any separate rules that apply to financial institutions and to national security-related IP transfers or licensing. Valuation firms are required to demonstrate relevant professional, quality-control and risk-control capabilities; conduct independent, objective and impartial valuations; avoid using preset values as conclusions; strengthen staff ethics and competency training; apply project risk controls and report quality review; and set fees reasonably in light of workload and expected costs. It also permits the use of external IP or industry experts where specialised knowledge is lacking, points to the use of patent evaluation reports and copyright appraisal reports as references in relevant cases, encourages building multidisciplinary talent teams, and supports the use of tools such as big data and artificial intelligence to develop “intelligent” valuation models. For IP pledge financing valuations, firms are directed to reflect the dynamic and intangible nature of IP and differences in realisability, providing decision-relevant input for banks, insurers and guarantee companies. Supervision is to be coordinated across the four agencies, including statistics collection and disclosure, development of an open and transparent data service platform, and enhanced scrutiny of large and abnormal IP valuation reports. The China Appraisal Society is tasked with strengthening self-regulation, improving the IP valuation standards framework and expanding training. The notice also sets responsibilities for valuers, clients and report users, and calls on financial institutions using valuation results to assess the relationship between loan or guarantee amounts and appraised value when setting pledge rates and to calibrate tenors for technology-related IP. The measures take effect upon issuance and prevail over earlier provisions that conflict with the notice.

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