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Implementation Measures for Auction in the Transaction of State-Owned Property

Article 1 In accordance with the Auction Law of the People’s Republic of China, the Rules on the Transaction of State-Owned Property Rights and the Rules for Organizing Transaction and Contract Signing, these measures are introduced to regulate the auction in the transaction of state-owned property.

Article 2 These rules are applicable when property rights transaction organizations organize auction for the transaction of state-owned property.

Article 3 The property transaction auctions shall observe relevant laws, regulations, and comply with the principles of openness, fairness, justice and honest.

Article 4 Defined in these measures, the bidder refers to the intended transferee that has filed the application and obtained the accreditation during the release of property rights transaction information and the auction notice.

Defined in these measures, the buyer refers to the bidder that wins the auction with the highest price.

Defined in these measures, the auction organization refers to the legal body of enterprise approved by the property rights transaction organization and has the qualification to conduct the auction.

All bodies above shall observe the regulations of the property rights transaction market.

Article 5 The auction activity for the transaction of property rights shall be organized, coordinated, supervised and guided by the property rights transaction organization, and implemented by the auction organization.

Article 6 Before the property rights transaction organization accepts the transfer application, the transferor shall sign a commission contract with the broker members of the auction organization and the property rights transaction organization, and entrust the contract to the property rights transaction organization for the record. The commission contract usually includes the following elements:

1. The names and addresses of the transferor, the broker member and the auction organization

2. The names and amount of the auction objects

3. The time and location of the auction

4. The commission, method of payment and payment limit for the auction

5. The method of payment and payment limit for the property rights transaction

6. Liability for breach

7. Other relevant matters agreed upon.

Article 7 The transferor shall apply to the property rights transaction organization for information release about the transaction of property rights through its commissioned broker member, submit the information release application, the notice on property rights transaction and other supplementary materials, and entrust the property rights transaction organization to publicly release the information about property rights transaction.

The transferor shall be responsible for the authenticity, completeness and validity of the submitted materials.

The commissioned broker member shall verify the transaction property and the materials provided by the transferor.

Article 8 The auction body conducting the auction shall issue the auction announcement according to the information release application for the property rights transaction and the relevant contents in the notice on property rights transaction. Generally, an auction announcement shall include the following elements:

1. Notice period of the auction

2. The auction property

3. The time and location of the displaying and querying of the auction property

4. The procedures and deadlines for bidding registration

5. The time and location of the auction

6. The rules and instructions for the auction

7. Special notices for the auction

The auction body conducting the auction shall investigate and verify the compliance of the materials provided by the transferor to the auction requirements and the possible legal risks of the auction property, and reveal the information found in the auction announcement.

Article 9 The property rights transaction organization shall examine and verify the notice on property rights transaction, the auction announcement and other relevant materials provided by the broker member and the auction body. Upon examination, the property rights transaction organization shall publish the notice on property rights transaction on publicly-released, provincial-level newspapers and magazines specializing in economy or finance, and on the website of the property rights transaction organization. The auction body shall public the auction announcement on the newspapers and magazines approved by the property rights transaction organization as well as the website of the property rights transaction organization.

The auction announcement shall be released simultaneously with the notice on property rights transaction. The deadline for bidding registration shall be the same as the deadline for the release of the notice on property rights transaction.

Article 10 During the release of property rights transaction information, the intended transferee may look up the relevant materials about the property rights transaction through the commissioned broker member. Before the auction, the transferor, its broker member and the auction body shall display the auction property or arrange it for investigation by the intended transferee, and assist the intended transferee to query relevant issues.

Article 11 Within the time limit of the property rights transaction notice and the auction announcement, the intended transferee shall register for the bidding together with its commissioned broker member at the auction body conducting the auction, and apply for property rights bidding to the property rights transaction organization through its commissioned broker member.

Article 12 The intended transferee shall be responsible for the authenticity, completeness, and validity of the materials submitted.

The entrusted broker member shall conduct thorough investigation into the credit standing and respectability of the intended transferee, and verify the authenticity, completeness, validity and compliance of the materials submitted by the intended transferee, and offer verification opinions.

Article 13 The auction body conducting the auction shall clearly state the regulations and requirements of the auction to the intended transferee when receiving the latter’s bidding registration request.

The auction body conducting the auction shall inform the property rights transaction organization of the bidding registration within 2 business days after the deadline of the bidding registration, and transfer all relevant materials provided by the intended transferee to the property rights transaction organization.

Article 14 The property rights transaction organization will verify the bidding qualification of the intended transferee according to relevant procedures, and inform the intended transferee, the transferor and the auction body conducting the auction in written form about the results of the qualification verification.

Article 15 When the property rights transaction items agreed to be sold through auction attract 2 or more eligible bidders within the time limit of information release, an auction shall be conducted by the auction body.

When the property rights transaction items agreed to be sold through auction attract only 1 eligible bidder within the time limit of information release, the auction will not be held, and the property rights transaction organization will organize a transaction according to the agreement in the notice on property rights transaction.

When the property rights transaction items agreed to be sold through auction attract no eligible bidder within the time limit of information release, the property rights transaction organization will prolong the time of information release or terminate the property rights transaction according to the agreement in the notice on property rights transaction.

Article 16 The bidder shall pay the transaction margin in full within 3 business days after its qualification is verified, withdraw a bidding number, and obtain the legal bidding qualification. The amount of transaction margin paid does not exceed 30 percent of the listed price of the property rights transaction.

Bidders that do not pay the transaction margin within the stipulated time limit shall lose the bidding qualification.

Article 17 Bidders may participate in the auction independently, or through a commissioned agency. Bidders that have entrusted a broker member as the agency shall participate in the auction with the broker member.

Agencies that participate in the auction shall present the letter of authorization signed by the bidder and the copies of ID certifications of the bidder and the agency. The letter of authorization shall include the name of the agency, the entrusted issue, limits of authority and time.

Article 18 During the auction, once the bidder offers or responds to a price, the price shall not be withdrawn. When a higher price is offered by another bidder, the former price losses its constraint force.

Article 19 The deal is complete when the highest price offered or responded to by the buyer is confirmed by the auctioneer’s gavel or other forms of open confirmation.

Article 20 When the auction body conducts the auction, a auction note shall be prepared and signed by the auctioneer and the recorder. Upon completion of the auction, the note shall be signed by the vendee and its agency.

Article 21 Upon completion of the auction, the vendee shall sign a auction completion confirmation with the auction body conducting the auction on the spot, sign a property rights transaction agreement with the transferor through its entrusted broker member and complete relevant procedures for the transaction of property rights. The property rights transaction organization shall verify the transaction agreement.

Article 22 The auction body shall properly keep the auction note and other relevant materials, and transfer them to the property rights transaction organization for the record.

Article 23 The transaction margin, transaction payment shall be settled through the account of the property rights transaction organization according to the relevant rules on settlement of property rights transaction.

The transaction margin paid by the vendee shall be turned into the transaction payment. The transaction margin paid by other bidders shall be refunded in full within 3 business days after the auction is completed.

Article 24 The property rights transaction organization shall present the certification for property rights transaction according to the verification of the property rights transaction agreement and the settlement of the transaction payment.

Article 25 During the process of conducting the auction, the auction body shall be guided by the property rights transaction organization and obey relevant laws on auction and regulations on property rights transaction, as well as professional guidelines. The transferor, the bidder, the vendee, the auction body and the broker member, in the event of violation of laws, rules or regulations during the auction, shall be held responsible by the supervising organization.

If the vendee does not obtain the auction property according to the agreement, the transferor and the auction body conducting the auction shall be held responsible for breaking the contract. The bidder that gives up the transaction after identified as the vendee shall be held responsible for breaking the contract.

Article 26 These measures shall take effect as from release.

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