[2004] No. 24

Measures for the Administration of Auctions

Chapter I General Provisions

Article 1 With a view to standardizing auction activities, maintaining the order of the auction market and promoting the
opening-up and healthy development of the auction sector, the present Measures are formulated according to the Auction Law
of the People's Republic of China (hereinafter referred to as the "Auction Law") and other laws, administrative regulations
and rules concerning foreign investment.

Article 2 The present Measures shall be applicable to auction activities by auction companies within the territory of the
People's Republic of China.
All kinds of for-profit auction activities shall be conducted by lawfully incorporated auction companies.

Article 3 The "auction company" referred to as in the present measures shall mean a limited liability company or a joint
stock limited company incorporated in China to engage in auction activities.

Article 4 The Ministry of Commerce shall be the competent department of auction sector and shall supervise and regulate
the auction sector throughout the country.
The competent departments of commerce of the people's governments of all provinces, autonomous regions and
municipalities directly under the Central Government (hereinafter referred to as the "competent department(s) of
commerce at the provincial level") and of the cities divided into districts (hereinafter referred to as the "competent
department(s) of commerce at the city level") shall supervise and regulate the auction sector in their respective
administrative regions.

Article 5 When undertaking auction activities, auction companies must accord with the Auction Law and other relevant
laws, administrative regulations and rules and observe the principles of openness, impartiality, fairness and good faith.

Chapter II Establishment, Change and Termination of Auction Companies

Article 6 To apply for the establishment of an auction company, the investor must have a good credit without records
of any act in violation of laws, administrative regulations or
rules.
Article 7 Anyone, who applies to establish an auction
company, must meet the following requirements:
(1) having registered capital of at least one million yuan;
(2) having its own name, organizational structure and
articles of association;
(3) having a fixed business place ;
(4) having at least three staff members who are qualified to
engage in the auction sector, of which there must be at least
one auctioneer; and having full-time or part-time personnel
who are qualified to engage in the sector closely related to
its principal business;
(5) having its auction rules according with the relevant
laws, administrative regulations and the present Measures; and
(6) conforming to the planning of the competent department of
commerce for the development of the auction sector.
Article 8 To apply for the establishment of an auction
company, one must submit the following materials:
(1) a written application;
(2) the articles of association and auction rules;
(3) a Notice of Advance Approval of Corporate Names as issued
by the administrative department for industry and commerce;
(4) the resume and valid ID certificate of the person to be
the legal representative;
(5) the qualification certificate of the auctioneers to be
employed for the practice of auction business and relevant
qualification certifications of other staff members to be
employed; and
(6) a certificate of title to or a contract of tenancy for
the fixed place of business.
Article 9 When conducting auction sales of cultural relics,
every auction company shall comply with the laws and
administrative regulations concerning such auctions.
Auction sales of confiscated articles and articles seized for
payment of taxes or fines by administrative organs of the
state, confiscated articles and articles seized for payment of
fines or fines by the people's courts, recovered articles that
cannot be returned to their owners and other special
state-owned assets shall be conducted by auction companies
that have corresponding auction qualifications. The specific
requirements for such qualifications shall be determined by
the competent departments of commerce at the provincial level
in conjunction with the departments concerned in the light of
the principles of standard administration and competitive
selection, which shall be submitted to the Ministry of
Commerce for archival purposes.
Article 10 The name of an auction company shall conform to
the provisions on the registration and control of corporation
names, and shall contain the word "auction" as a description
of the trade that the company engages in.
Article 11 To apply for the establishment of a branch, an
auction company shall meet the following requirements.
(1) the establishment of a branch shall accord with the
planning for the development of the auction sector;
(2) the company shall have passed the annual inspection;
(3) the registered capital of the company shall be not lower
than 5 million yuan and be paid in full amount; and the
company shall appropriate to each of its branches at least a
million yuan of cash or in kind;
(4) the branch to be set up shall have at least two staff
members who are qualified to engage in the auction sector and
shall have full-time or part-time personnel who are qualified
to engage in the sector closely related to its principal
business;
(5) the branch to be set up shall have a fixed place of
business; and
(6) the company shall have engaged in the auction business
for at least three years, make profits during the recent two
successive years and have had a total auction turnover of not
less than 50 million yuan for the last year; or the company
shall have had a total auction turnover of not less than 200
million yuan for the last year.
Article 12 To apply for the establishment of a branch, an
auction company must submit:
(1) an application report for the establishment of a branch;
(2) a duplicate of the business license of the company as a
business corporation;
(3) the annual financial statements of the company for the
last two years as audited by an accounting firm;
(4) the resume and valid ID certificate of the person to be
in charge of the branch;
(5) the qualification certificate for the practice of auction
business of the person to be employed as an auctioneer and the
corresponding qualification certifications of persons to be
employed as staff members of the branch; and
(6) a certificate of title to or a contract of tenancy for
the fixed place of business.
Article 13 The following procedures shall be followed for the
establishment of an auction company or a branch thereof:
The application for the establishment of an auction company
or a branch thereof shall, after the examination of the local
competent department of commerce at the city level, be
submitted to the competent department of commerce at the
provincial level for verification and issuance of an approval
certificate for auction business, with which the applicant
shall go through the registration formalities at the local
administrative department for industry and commerce.
The competent departments of commerce at the provincial level
may adopt hearing of witnesses on the establishment of an
auction company or a branch thereof.
The approval certificate for auction business shall be
uniformly printed by the Ministry of Commerce.
Article 14 In the case of any change in an auction company,
the company must submit such change to the competent
department of commerce at the provincial level for
verification and for re-issuance of an approval certificate
for auction business before going through the formalities of
change registration with the administrative department for
industry and commerce.
Article 15 The approval certificate for auction business
shall automatically become invalid, in case the relevant
auction company or branch thereof fails to draw a business
license within six months from receipt of such certificate.
Where an auction company or a branch thereof fails to start
business within six months from its establishment or has held
no auction sales or has no tax certificates without justified
reasons consecutively in six months after it starts business,
the relevant departments shall revoke its business license and
the department of commerce shall withdraw its approval
certificate for auction business.
Article 16 An auction company, which is dissolved for any
reason as specified in its articles of association, a
resolution of its shareholders' meeting or any other reasons,
or closed due to its violation of any law, administrative
regulations or the present Measures or declared bankrupt
according to law for its insolvency, shall be cancelled
according to law by relevant departments.

Chapter III Establishment, Change and Termination of
Foreign-invested Auction Companies
Article 17 Foreign-invested auction companies may engage in
for-profit auction business unless it is otherwise provided
for by any law or administrative regulation.
Article 18 Foreign investors, who have a considerable
economic strength, advanced auction technologies and operation
and management experience and extensive international auction
marketing network, are encouraged to establish
foreign-invested auction companies in China.
Article 19 In addition to those provided for in Article 7
hereof, the following requirements shall be met for the
establishment of a foreign-invested auction company:
(1) relevant provisions concerning the registered capital and
total investment of foreign-invested enterprises shall be
observed; and
(2) the management duration of a foreign-invested auction
company shall generally not beyond 30 years; in the case of
one in a central or western area, the management duration
shall not beyond 40 years.
Article 20 To apply for the establishment of a branch, a
foreign-invested auction company shall on time take part in
and have passed the joint annual inspection of
foreign-invested enterprises in addition to the requirements
as provided for in Article 11 hereof.
Article 21 To apply for the establishment of a
foreign-invested auction company, the applicant must submit
the following documents in addition to those as provided for
in Article 8 hereof:
(1) the contracts and articles of association (only the
articles of association in the case of a foreign-capital
auction company) and the attachments thereto;
(2) photocopies of the credit and registration certificates
of all parties to the investment ();
(3) the audit reports of all parties to the investment for
the last year as audited by an accounting firm;
(4) a report on assessment of the state-owned assets to be
invested by the Chinese investor into the Chinese-foreign
equity joint venture or Chinese-foreign cooperative joint
venture to be established; and
(5) a list of persons to be the members of the board of
directors of the company to be established and letters of
appointment of the directors to be appointed by all parties to
the investment.
To apply for the establishment of a branch, a
foreign-invested auction company shall submit a capital
verification report in addition to those provided for in
Article 12 hereof.
Article 22 The following procedures shall be followed for the
establishment of a foreign-invested auction company or a
branch thereof:
The applicant shall submit its application documents as
provided for in Article 20 hereof to the Ministry of Commerce,
which shall, within the specified period of time from receipt
of all application documents, make a decision on whether or
not to approve the application. In the case of approval, the
Ministry of Commerce shall issue an approval certificate for
the establishment of a foreign-invested enterprise and an
approval certificate for auction business, or else give an
explanation.
The applicant shall go through the registration formalities
at the local administrative department for industry and
commerce within one month from receipt of the approval
certificate for the establishment of a foreign-invested
enterprise and an approval certificate for auction business.
The Ministry of Commerce may hold a hearing on the
establishment of a foreign-invested auction company or a
branch thereof.
Article 23 In the case of any change in a foreign-invested
auction company, the company shall submit such change to the
Ministry of Commerce for verification and for re-issuance of
an approval certificate for auction business and an approval
certificate for the establishment of a foreign-invested
enterprise before going through the formalities for change
registration at the administrative department for industry and
commerce.
Article 24 Where a foreign-invested auction company or a
branch thereof fails to start business within six months from
its establishment or has held no auction sales or has no tax
certificates without justifiable reasons during a consecutive
period of six months after it starts business, the relevant
departments shall revoke its business license and the Ministry
of Commerce shall withdraw its approval certificate for
auction business.
Article 25 A foreign-invested auction company, which is
dissolved for any reason specified in its articles of
association, a resolution of its shareholders' meeting or
board of directors or any other reason, or closed due to its
violation of any law, administrative regulations or the
present Measures or declared bankrupt according to law for its
insolvency, shall be cancelled by the relevant departments.

Chapter IV Persons Engaged in the Auction Sector and Auction
Activities
Article 26 The state shall adopt a credential system to
professional and technical personnel in auction sector, under
which only a person who has obtained the qualification
certificate to be an auctioneer and registered as an
auctioneer may preside over auction sales.
The "auctioneer" referred to as in the present Measures shall
mean a person who has passed the national examination for
auctioneers, obtained the qualification certificate to be an
auctioneer e of the People's Republic of China issued by China
Auction Association with the official seals of both the
Ministry of Personnel and the Ministry of Commerce affixed on
it and registered as an auctioneer.
Article 27 An auctioneer may register as an auctioneer of
only one auction company and may not hold a part-time post in
any other auction company.
No auctioneer may lend his qualification certificate to be an
auctioneer of the People's Republic of China to any other
individual or entity.
Article 28 An auctioneer may change the auction company of
which he has registered as an auctioneer. If he plans to do
so, he shall go through the formalities of change registration
with Chine Auction Association.
China Auction Association shall submit the auctioneers'
registrations and change status to the Ministry of Commerce
for archival purposes on a monthly basis.
Article 29 None of the following articles or the rights to
property may be put on auction:
(1) those of which the purchase and sale are prohibited by
any law or administrative regulation;
(2) those to or of which the ownership or the disposition
right is in dispute not yet settled by a judicial or
administrative organ; and
(3) goods under the Customs control without Customs
clearance.
Article 30 Auction companies shall conduct their auction
business according to law and none of them may:
(1) let or transfer without permission its right to engage in
the auction business;
(2) make false representations of any auction object, which
would cause any loss to the purchaser;
(3) employ any auctioneer without registering according to
law or any other person to preside over an auction sale as an
auctioneer;
(4) conduct any unfair competition by maliciously decreasing
the commission rate, charging a commission below the auction
cost or even without charging any commission (except for
charity auctions) or by offering the consignor a kickback; or
(5) commit any other act in violation of laws or regulations.
Article 31 If the auction company finds any article or booty
for which the public security organ has issued a circular for
cooperative investigation, it shall immediately report that to
the public security organ.
Article 32 In the case of entrusted bidding, a power of
attorney and a copy of the ID certificates of both the agent
and the principal shall be issued.
The power of attorney shall include the name of the agent,
matters delegated and the purview and the term of the
delegated authority.
Article 33 Before conducting an auction, the auction company
shall conclude a written agreement with its consignor
concerning the treatment of matters when no transaction has
been made on the auction object and concerning the
compensation for damages that might be caused due to the
consignor's suspending or terminating of the auction.
Article 34 An auction company shall have a special person to
take proper care of the auction objects handed over by its
consignors, set up an auction object custody and shift system
and take necessary security measures.
Article 35 To hold an auction sale, the auction company shall
make an announcement in pursuance of the properties of the
auction objects and nature of the auction sale within the time
limit as provided for by the Auction Law and relevant laws or
administrative regulations. The announcement shall be
published in newspapers with larger circulation as designated
by the competent department of commerce at the place where the
auction objects are located or where the auction sale is to be
held or in other media with a similar influence.
Article 36 Where the auction company ought to exhibit the
auction objects before the auction sale, it shall provide
convenient conditions for the competitive bidders to examine
such auction objects and offer the relevant materials at the
same time.
The auction objects shall be exhibited for at least two days
except fresh goods or other perishable goods.
Article 37 An auction company shall be entitled to verify or
require the consignor to state the source and defects of the
auction object.
The auction company is obliged to state to the competitive
bidders any defect of the auction object that it knows or
should have known.
Article 38 Where any law, administrative regulation or rule
prescribes any special requirements for the purchaser of an
auction object, the auction object may be auctioned off only
to persons who meet such requirements.
Where an auction object is the business qualification that
needs administrative licensing according to laws,
administrative regulations or rules and is transferable, the
consignor shall obtain approval from the administrative organ
concerned before the auction sale.
Article 39 The auction company may designate seats for biding
agents on the auction spot and make a statement thereof to all
bidders at the beginning of the auction sale.
Article 40 An auction sale shall be suspended under any of
the following conditions:
(1) no competitive bidder is present at the auction sale;
(2) any third person challenges the ownership to or the
disposition right of the auction object and offers a valid
certificate on the spot;
(3) the consignor has given notice in written form to the
auction company before the auction sale on reasonable grounds;
(4) the auction sale cannot be carried out for the time being
due to the occurrence of any accident; or
(5) any other circumstances under which the auction sale
ought to be suspended according to law.
The suspension of an auction sale shall be declared by the
auction company. The auction sale shall be resumed upon the
elimination of the reasons for suspension.
Article 41 The auction sale shall be terminated under any of
the following conditions:
(1) the people's court, an arbitral organ or an
administrative organ concerned has determined that the
consignor has no disposition right of the auction object and
has given notice of it to the auction company;
(2) the auction object is ascertained to be a booty;
(3) the auction sale cannot be carried out due to the
occurrence of any force majeure or accident;
(4) the auction object has been damaged or perished before
the auction sale;
(5) the consignor has given notice in written form of the
termination of auction sale to the auction company before the
auction sale; or
(6) any other circumstances under which the auction sale
ought to be terminated according to law.
The termination of an auction sale shall be declared by the
auction company. Where the consignor requests to proceed with
the auction sale after the termination of it, he shall go
through the auction formalities again.
Article 42 In the case of an auction sale held within the
territory of the People's Republic of China jointly by a
foreign-invested auction company and a Chinese-capital auction
company, the auction object shall accord with the relevant
provisions of laws, administrative regulations and the present
Measures.

Chapter V Supervision and Administration
Article 43 The Ministry of Commerce shall organize the
formulation of relevant rules and policies on auction sector,
guide all regions in working out their respective plans for
the development of auction sector and setting up supervision
and verification, industry statistic and credit management
systems for auction sector, and shall be responsible for the
promotion and administration of the use of foreign capital and
provide operation guidance to self-disciplinary organizations
in the auction sector.
Article 44 The competent departments of commerce at the
provincial level shall be responsible for the formulation and
implementation of the plan for the development of the auction
sector for their respective regions and submit the plan to the
Ministry of Commerce for archival purposes.
The competent departments of commerce at the provincial level
shall set up their respective supervision and verification,
industry statistic and credit management systems governing
auction companies and persons engaging in the auction sector,
shall be responsible for the verification and licensing of the
establishment of auction companies and branches thereof and
conduct administration and guidance of the local
self-disciplinary organizations in the auction sector.
The competent departments of commerce at the provincial level
shall create conditions for setting up a computer system
interconnected with those of the local auction companies and
other administrative departments, keep records of the status
of supervision and inspection and the treatment of auction
activities, render their supervision and verification opinions
on the auction companies on annual basis, charge auction
companies not up to standard to make rectifications in a
specified time limit and report the verification results to
the authorities concerned.
Article 45 The auction associations shall supervise the
auction companies and auctioneers according to law and their
respective articles of association. They shall work out their
auction criterion, strengthen the self-disciplinary
administration, regulate relations between their member
companies and the relevant departments of the government and
relations between their member companies, provide service to
their member companies and safeguard the legitimate rights and
interests of their member companies.
China Auction Association shall, under the guidance of the
Ministry of Commerce, implement an the credit management
system of auction companies throughout the country and
organize the examinations, assessment and qualification
certification for auctioneers.

Chapter VI Legal Responsibilities
Article 46 Any company, which engages in for-profit auction
activities without a license, shall be banned according to the
relevant provisions of the state.
Article 47 Where any auctioneer violates the provisions of
Article 26 or 27 hereof or conceals facts and figures from or
provides false information to the regulatory department or
commits any other lawless act, the competent department of
commerce at the provincial level may notify such lawless acts
and its proposal for treatment to China Auction Association,
which shall deal with the offending auctioneer according to
the relevant provisions and report in written form the result
of treatment to the competent department of commerce and
auction association at the place of the auctioneer within 10
working days.
Article 48 Any auction company, which has caused any loss to
the purchaser by violating the provisions of Article 29
hereof, shall make compensation for such damages; if such loss
is attributable to the consignor, the auction company shall be
entitled to recover the loss from the consignor.
Article 49 Any auction company, which violates the provisions
of Article 30 (1) hereof, shall be ordered by the competent
department of commerce at the provincial level to make
corrections and be imposed upon a fine not exceeding 30,000
yuan.
Article 50 Any auction company, which violates the provisions
of Article 30 (3) hereof, shall be given a warning and a fine
at or above the amount of its illegal earnings with roof of
30,000 yuan pursuant to the severity of the circumstances; in
the case of non-illegal earnings, it shall be given a fine not
exceeding 10,000 yuan by the competent department of commerce
at the provincial level, and make compensation for losses
caused to the consignor and purchaser according to law, if
any.
Article 51 Any auction company, which violates Article 30 (2)
or (4) hereof, shall be punished by the relevant
administrative organ according to law.
Article 52 Any auction company, which violates the provisions
of Article 35 or 36 hereof by making irregular announcements
or exhibitions before an auction sale, shall be given a
warning in the light of the severity of the circumstances,
ordered to make corrections or postpone the auction sale or
given a fine not exceeding 10,000 yuan by the competent
department of commerce at the provincial level.
Article 53 Where the auction company or consignor violates
the provisions of Article 37 hereof by failing to state the
defect of the auction object and causes damages to the
purchaser, the purchaser shall be entitled to request the
auction company to make compensation ; if the damages are
attributable to the consignor, the auction company shall be
entitled to recover the compensation from the consignor.
Where the auction company or the consignor has stated before
the auction sale that they cannot guarantee the genuineness or
quality of the auction object, it/he may not bear the
responsibility to warrant the defects (hereafter referred to
as disclaimer). However, the disclaimer shall be invalid if
the auction company or the consignor knows or should have
known the defect of the auction object.
Article 54 Where, after a successful bidding, the consignor
fails to assist the purchaser in going through the formalities
for changing certificates or licenses and ownership transfer
and thus causes losses to the purchaser or to the auction
company, the consignor shall be liable for such losses
according to law.
The consignor shall be liable for the losses of the auction
company or the purchaser according to law as caused by the
suspension or termination of the auction sale as required by
the consignor.
Article 55 The competent department of commerce at the
provincial level or the Ministry of Commerce may withdraw its
decision of approval for the establishment of an auction
company or a branch thereof, if such decision has been made:
(1) by the functionary's abusing his power or neglecting his
duty;
(2) in violation of the requirements as provided for in the
Auction Law or the present Measures; or
(3) beyond its statutory authority.
Article 56 Where any functionary of a competent department of
commerce or any staff member of an auction association abuses
his power, engages in malpractice for private benefit,
neglects his duty, extorts or takes bribes, the person in
charge who is directly responsible and other persons directly
responsible shall be given an administrative punishment, or
shall be investigated for assuming criminal responsibilities
if a crime is constituted.
Article 57 Every functionary of competent departments of
commerce shall, according to the relevant provisions on
confidentiality, keep confidential the information he gets to
knowwhen performing his duties as required by the relevant
auction company, consignor, bidder or purchaser. In the case
of any improper disclosure, he shall be dealt with according
to the relevant provisions. Where the auction company believes
that some materials submitted by it to the administrative
organ contain any confidential information, it shall mark the
"confidential" on the materials and have them sealed.

Chapter VII Supplementary Provisions

Article 58 The introduction of auction sales into commodity
transaction markets, such as the agricultural product
wholesale market and motor vehicle transaction market, and the
administration of auction sales on the Internet shall be
conducted by referring to the present Measures in principle,
for which the specific measures shall be separately
formulated.
Article 59 All wholly state-owned auction companies shall be
reorganized according to the relevant provisions of the state.
Article 60 The power to interpret the present Measures shall
remain with the Ministry of Commerce.
Article 61 The present Measures shall come into force as of
January 1, 2005.