Circular on Strengthening the Examination, Approval and Administration of Wholly Foreign-owned Shipping Companies

(Issued by the Ministry of Transport on August 15 2011.)

Jiao Shui Fa [2011] No.440

Transport departments (commissions) of provinces, autonomous regions and municipalities directly under the central government and the Transport and Port Authorities of Tianjin Municipality and Shanghai Municipality:

With a view to regulating the investments and operations of foreign shipping companies in China, protecting the lawful rights and interests of investors and further promoting the development of China's international shipping industry, we, following consultations with the Ministry of Commerce, hereby notify you on matters relevant to strengthening the examination, approval and administration of wholly foreign-owned shipping companies (WFOSCs).

I. Clarifying the Approval Authorities and the Departments Responsible for Business Administration

The Ministry of Transport and the competent commerce departments of provinces, autonomous regions, municipalities directly under the central government and cities with independent development plans (the Provincial-level Commerce Departments) are responsible for the examination and approval of the establishment of WFOSCs in China by foreign shipping companies. The Ministry of Transport and the competent transport departments of provinces, autonomous regions and municipalities directly under the central government are responsible for business administration relating to WFOSCs.

II. Appropriately Liberalising the Market Entry Conditions for, and Scope of Business of, WFOSCs

The Ministry of Transport and the competent transport departments of provinces, autonomous regions and municipalities directly under the central government shall examine and determine the market entry conditions for WFOSCs (including WFOSCs and their branches). The following aspects of current relevant provisions shall be appropriately liberalised:

(1) Foreign shipping companies, as required by them, shall be permitted to directly invest in the establishment of WFOSCs in China without first being required to establish resident representative offices;

(2) foreign shipping companies shall be permitted to establish WFOSCs in open port cities where they have a stable cargo source or passenger source; a WFOSC may, after it has paid in its registered capital in full and been in business for one year, establish a branch in another open port city where the foreign shipping company has a stable cargo source or passenger source; and

(3) an approved WFOSC or a branch thereof shall be permitted to provide services such as cargo canvassing, passenger canvassing, issuance of bills of lading, passenger ticketing, settlement of freight charges and execution of service contracts for the vessels owned or operated by the WFOSC's parent.

III. Specifying of the Procedure for the Application for the Establishment of a WFOSC

(1) A foreign shipping company shall submit an application to the Ministry of Transport with a copy of the application materials sent to the competent provincial-level transport authority of the place where the WFOSC is to be established.

Once the relevant competent provincial-level transport authority receives the aforementioned materials copied to it, it shall review the same and forward its comments upon review to the Ministry of Transport within seven working days from the date of receipt of the materials.

(2) The Ministry of Transport shall complete the review of the application materials within 20 working days from the date of receipt of the application. If the application materials are found to be true and complete, the Ministry of Transport will approve the application for establishment and issue an official reply. If the application materials are found to be untrue or incomplete, the Ministry of Transport will withhold approval of the application for establishment and notify the applicant in writing, giving it the reasons. The applicant shall apply to carry out the procedures for the establishment of the enterprise with the Provincial-level Commerce Department of the place where it is located on the strength of the official reply of the Ministry of Transport and other documents necessary for the establishment of a wholly foreign-owned enterprise.

(3) Once it has secured the approval of the Provincial-level Commerce Department, the applicant shall apply for registration to, and collect its business licence from, the administration for industry and commerce within the prescribed period of time in accordance with relevant provisions on the registration of companies. The applicant may only engage in business operations once it has applied for and secured a Business Permit for a Wholly Foreign-owned Shipping Company from the Ministry of Transport on the strength of its business licence.

Other matters relating to the establishment of WFOSCs shall continue to be handled in accordance with current relevant provisions of the Tentative Measures for the Examination, Approval and Administration of Wholly Foreign-owned Shipping Companies.