The fourth meeting of the Standing Committee conducted a second review of the Draft Law on Asset Valuation in August 2013. Following the meeting, the full text of the second draft was published on the website of the National People's Congress of China, and public comments were again solicited from the general public. The Law Committee and the Legislative Affairs Commission held symposiums to listen to the views of relevant departments, industry associations, valuation agencies, clients, and experts. The Law Committee and the Legislative Affairs Commission also conducted field investigations in Beijing, Tianjin, Anhui, and Fujian, and exchanged views with relevant authorities on the key issues raised in the draft, engaging in joint deliberations. On July 24, the Law Committee convened a meeting to review the draft based on the deliberations of the members of the Standing Committee as well as feedback received from various quarters. Officials from the Finance and Economic Committee, the Legal Affairs Office of the State Council, the Ministry of Finance, and the Ministry of Natural Resources, along with colleagues from the Ministry of Housing and Urban-Rural Development, the Ministry of Commerce, and the Insurance Regulatory Commission, attended the meeting as observers. On August 18, the Law Committee held another meeting to conduct a further review. The Law Committee held that since the second review of the draft, the State Council had, in several batches, abolished the licensing requirements for professions such as asset appraisers, land appraisers, mining rights appraisers, and insurance loss adjusters. Meanwhile, the General Office of the CPC Central Committee and the General Office of the State Council had issued the "Overall Plan for Decoupling Industry Associations and Chambers of Commerce from Administrative Organs." The revisions to the draft should fully embody the spirit of reform, focusing particularly on regulating the professional conduct of appraisers and appraisal institutions. For issues on which there are significant differences of opinion, those that can reach consensus should be revised; those that cannot achieve consensus should not be amended for the time being. The following is a report on the main revisions made to the second draft of the Law on Asset Valuation:

　　I. The first paragraph of Article 5 in the second draft stipulates that appraisers and appraisal institutions must comply with laws, administrative regulations, and appraisal standards when practicing their profession. Some members of the Standing Committee pointed out that, as professionals and institutions, appraisers and appraisal agencies, in addition to complying with laws, regulations, and appraisal standards, should also adhere to the principles of independence, objectivity, and fairness in their practice. They suggested explicitly stating this point. After careful deliberation, the Legislative Affairs Commission recommends revising the above provision to read: "Appraisers practicing their profession and appraisal institutions conducting business shall comply with laws, administrative regulations, and appraisal standards and shall adhere to the principles of independence, objectivity, and fairness." (Article 5, paragraph 1, in the third draft.)

　　II. Article 7, paragraph 1 of the second draft for deliberation stipulates that the State Council shall establish a coordination and cooperation mechanism for the asset valuation industry, led by the financial authorities, responsible for coordinating and guiding the development of the valuation industry. Some members of the Standing Committee, government departments, industry associations, and the general public have pointed out that, under the current management system, the valuation industry is managed separately by five different departments—namely, the Ministry of Finance, the Ministry of Natural Resources, the Ministry of Housing and Urban-Rural Development, the Ministry of Commerce, and the China Insurance Regulatory Commission—and suggested that each department should continue to exercise its own management responsibilities according to its respective duties. After careful consideration, the Legal Committee believes that establishing a coordination and cooperation mechanism for the valuation industry would help address the issue of multiple overlapping administrations. However, given the significant differences in opinion among the relevant departments at present, and considering that although various valuation specialties all belong to the broader valuation industry, they each possess their own unique professional characteristics, in order to achieve the broadest possible consensus, the Committee recommends temporarily maintaining the current separate management system and deleting the provision on establishing such a coordination and cooperation mechanism. At the same time, the corresponding provision in Article 43 of the second draft for deliberation—concerning the State Council’s financial authority working with other relevant departments to formulate management measures for valuation institutions and the like—should be revised to specify that these management measures shall be formulated separately by the respective departments. (Articles 7 and 40 of the third draft for deliberation)

　　III. Article 12 of the second draft for review stipulates that the State shall implement a registration system for appraisers, and no one may practice without being registered. Some departments and industry associations have pointed out that the State Council has already abolished the previous system of mandatory qualification licensing for appraisers, replacing it with a competency-based management approach for professional qualifications. Only the qualification licensing for real estate appraisers has been retained, as it is based on the Urban Real Estate Management Law. Therefore, the draft should be aligned with this reform requirement. Some members of the Standing Committee have suggested that since appraisers provide specialized services, even after abolishing the mandatory qualification licensing, there should still be certain requirements for those permitted to engage in appraisal activities. At the same time, management of the appraiser qualification examination should be strengthened, with clear provisions regarding the organization of the examination and the formulation of examination procedures. After careful study, the Legislative Committee recommends the following amendments: First, the chapter title of Chapter Two should be changed from “Registered Appraisers” to “Appraisers,” and the relevant provisions on the registration of appraisers’ practice should be deleted accordingly. It should be clearly stated that the State adopts a competency-based management system for appraiser qualifications, and where otherwise provided by law, such provisions shall prevail. Second, it should be clarified that the nationwide unified examination for appraiser qualifications shall be organized and administered by the relevant national-level appraisal industry associations, and the examination procedures shall be formulated jointly by the human resources authority under the State Council and the administrative departments responsible for asset appraisal under the State Council. Third, it should be specified that citizens holding an associate degree or higher from a higher education institution may voluntarily apply to take the nationwide unified examination for appraiser qualifications; those who pass the examination will be awarded an appraiser qualification certificate by the relevant national-level appraisal industry association. Fourth, it should be clarified that individuals who have been subject to criminal penalties for intentional crimes or negligent crimes committed while engaged in appraisal, financial, accounting, or auditing activities, and whose sentences have not yet been fully served for a period of less than five years from the date of completion of the sentence, shall be prohibited from engaging in appraisal activities. (Chapter Title of Chapter Two, Article 9, Paragraph 2 of Article 10, Article 11, and Article 13 of the third draft for review.)

　　IV. According to Article 19 and Article 28 of the second draft for review, appraisers and appraisal institutions shall not sign or issue false appraisal reports. Some members of the Standing Committee pointed out that merely prohibiting the signing or issuance of false appraisal reports is not comprehensive enough and that a provision should also be added prohibiting the signing or issuance of appraisal reports containing material omissions, so as to align with relevant provisions in laws such as the Company Law. After careful study, the Legislative Affairs Commission recommends amending the above-mentioned provisions to read: Appraisers and appraisal institutions shall not sign or issue false appraisal reports or appraisal reports containing material omissions. At the same time, corresponding amendments will be made to the provisions on legal liabilities. (Article 16, item 7; Article 22, item 6; Article 47; Article 49 of the third draft for review.)

　　V. Some members of the Standing Committee pointed out that the assessment procedures are crucial for ensuring that assessment activities are conducted in a scientific and impartial manner. They suggested further refining the regulatory provisions on assessment procedures in Chapter Four and changing the chapter title to “Assessment Procedures.” After careful consideration, the Legislative Committee recommends making corresponding amendments to the chapter title of Chapter Four and adding the following procedural provisions: First, for assessment engagements that have been accepted, the assessment agency shall assign at least two appraisers to handle them. Second, based on the specific circumstances of each assessment engagement, appraisers shall conduct on-site investigations of the appraisal objects, collect proof of ownership, financial and accounting information, and other relevant materials, and verify and validate such materials. On the basis of analysis, summarization, and organization, they shall establish the foundation for the assessment. Third, appraisers shall analyze the applicability of various assessment methods. Except where the Assessment Standards mandate the selection of only one assessment method, they shall appropriately select two or more assessment methods and, on the basis of comprehensive comparison, arrive at an assessment conclusion and prepare an assessment report. Fourth, the assessment agency shall conduct an internal review of the assessment reports. (Chapter Four’s title, Article 26, Paragraph 1, Article 27, and Article 28 of the third draft for deliberation)

　　Six, some members of the Standing Committee and relevant departments suggested that, in line with the spirit of reform, the administrative authorities responsible for asset valuation should be decoupled from the asset valuation industry associations, and oversight over these associations should be strengthened. Some members of the Standing Committee also recommended clarifying the issue of establishing asset valuation industry associations. After careful study, the Legal Committee proposes adding the following provisions: First, asset valuation industry associations at the national level shall be established according to professional fields, and local-level asset valuation industry associations may be established as needed. Second, the administrative authorities under the State Council responsible for asset valuation shall organize the formulation of management measures for asset valuation industry associations. Third, the administrative authorities responsible for asset valuation shall not maintain any personnel or financial ties with the asset valuation industry associations. (Article 34, paragraph 2; Article 40; and Article 44 of the third draft for review)

　　VII. Article 40 of the second draft for review stipulates that assessment industry associations shall exercise self-regulatory management over their members, establish member credit files, and make these files publicly available. Some members of the Standing Committee suggested further strengthening the self-regulatory management exercised by industry associations over their members, as well as improving the credit file system and the supervision and inspection system for assessment reports. After careful study, the Legal Committee recommends adding the following provision: Assessment industry associations shall record in the credit files the compliance of their members with laws, administrative regulations, and assessment standards, and shall conduct regular inspections of assessment reports signed or issued by their members. (Article 37, Paragraphs 1, Items 5 and 8 of the third draft for review.)

　　In addition, some textual revisions were made to the second draft for review.