In accordance with the “Law of the People’s Republic of China on Wholly Foreign-owned Enterprise” and other relative rules & regulations on shipping, the Interim Procedures hereby is formulated in order to normalize the investment and operation of foreign shipping companies in the People’s Republic of China and protect the investors’ legal rights.
The Interim Procedures applies to foreign shipping companies that are going to set up wholly foreign-owned shipping companies in China.
The foreign shipping companies mentioned in Article 1 are shipping companies that have been established in foreign countries under foreign laws (herein after referred to as the Foreign Shippers).
The Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to as MOFTEC) and the Ministry of Communications shall be responsible for examination and approval of the establishment of the wholly foreign-owned shipping companies in China by the Foreign Shippers.
The establishment of wholly foreign-owned shipping company in China by the Foreign Shipper shall be examined and approved in accordance with the agreement on shipping between China Government and the foreign country of the Foreign Shipper, and relative laws and rules as well.
As for the Foreign Shipper that plans to set up a wholly foreign-owned shipping company in China, it should meet the following qualifications:
1. The Foreign Shipper shall have over 15 years experience in shipping;
2. The Foreign Shipper shall have set up a resident representative office approved by the Ministry of Communications for three years in the port city where the wholly foreign-owned shipping company is going to be set up;
3. The Foreign Shipper’s liners shall berth at least once every month at the port of the city where the wholly foreign-owned shipping company is going to be set up (The enterprise, which is engaged in management of shipping lines with cooperative ways such as joint dispatching of shipping, exchange of accommodations and joint operation, and has been issued the right of management on shipping lines against approval, is regarded as meeting the qualifications);
The Foreign Shipper, who is engaged in shipping with trampers, should have fixed sources of goods in China;
4. The Foreign Shipper shall have operated in China without violating the Chinese laws, administrative rules and regulations continuously for two years.
The Foreign Shipper shall submit the following documents for application of setting up a wholly foreign-owned shipping company:
2. Feasibility Study Report;
3. Articles of Association;
4. Legal documentation and credit certification of the applicant;
5. Letter of Appointment for the legal representative, the list on members of the board of directors and their resumes of the wholly foreign-owned shipping company;
6. Sample of B/L of the applicant;
7. Copies of approval documents on management of shipping lines and resident representative office;
8. Other documents required by MOFTEC and the Ministry of Communications.
The procedures for establishing wholly foreign-own shipping company is as follows:
1. The applicant shall submit all the documents mentioned in Article 6 to the department in charge of foreign trade and economic cooperation of the province, autonomous region or municipality directly under the Central Government where the wholly foreign-owned shipping company is going to be set up. The department in chare of foreign trade and economic cooperation shall preliminarily examine the documents submitted by the applicant. After approved, they shall be submitted to MOFTEC for approval and reported to the Ministry of Communication.
2. MOFTEC shall examine the application documents and take counsels with the Ministry of Communications. After MOFTEC and the Ministry of Communications have agreed unanimously, MOFTEC shall issue an approval. With the approval, the applicant shall get the “Certificate of Approval for Foreign-investment Enterprise” (or the “Certificate of Approval for Hong Kong/Macao/Taiwang-Investment Enterprise) from MOFTEC.
3. After approval of application, the applicant shall, within set time limit, go through registration formalities at the industrial and commercial administration and get the Business License according to stipulations on registration. Besides, the “Business License for Wholly Foreign-owned Shipping Company” shall be obtained from the Ministry of Communications before business starts.
The approved wholly foreign-owned shipping company or its branch can contract for goods shipment, issue B/L, collect freight and sign service contract for the shipping owned or managed by its parent company.
The registered capital of the wholly foreign-owned shipping company shall not be less than US$1 million.
The wholly foreign-owned shipping company can apply to set up branches in other port cities as business demands. To set up branches, the wholly foreign-owned shipping company shall meet the following qualifications:
1. The registered capital of the wholly foreign-owned shipping company shall have been paid completely, and it has been one year since the Company went into operation;
2. Its parent company shall already have had liners (including cooperative ways as joint dispatching of shipping, exchange of accommodations and joint operation) berth at the ports of the city where the wholly foreign-owed shipping company is going set up a branch.
3. Its parent company shall have established a resident representative office approved the Ministry of Communications for one year in the city where the wholly foreign-owned shipping company is going to set a branch.
4. The wholly foreign-owned shipping company and its parent company shall have operated in China without any activities violating Chinese laws, administrative rules and regulations continuously for one year.
In case the wholly foreign-owned shipping company sets up a branch, its registered capital shall correspondingly increase US$ 120,000 or more.
The Chinese employees of the wholly foreign-owned shipping company shall cover more than 85% of the total employees.
The wholly foreign-owned shipping company shall submit a report on state of operation of the previous year to MOFTEC and the Ministry of Communications at the end of April every year. Report on state of operation shall including the following contents:
1. Shipping lines of the liners berthing at the China ports;
2. Total employees and number of Chinese employees;
3. Freight volume (ten thousand ton) shipped from and to China ports, total volume of containers (TEU) and freight income;
4. Total amounts of business, profit and tax payment of that year.
The establishment of shipping companies exclusively invested by shipping companies of Hong Kong Special Administrative Region, Macao Special Administrative and Taiwang in other provinces, autonomous regions and municipalities directly under the Central Government of china shall refer to the Provisions.
The article shall come into force on the day of issuance.