Measures for the Administration of the Examination and Approval of Wholly Foreign-owned Shipping Companies (Revised)

(Promulgated by the Ministry of Transport and the Ministry of Commerce on, and effective as of, July 5 2015.)

Order of the MOT [2015] No.16

Article 1: These Measures have been formulated pursuant to the laws of the People's Republic of China on foreign-invested enterprises and relevant shipping laws and regulations in order to standardize the investments and operations in the People's Republic of China of foreign shipping companies and to protect the lawful rights and interests of investors.

Article 2: These Measures shall apply to the establishment of wholly-owned shipping companies in China by foreign shipping companies.

For the purposes of the preceding paragraph, the term “foreign shipping company” means a shipping enterprise established in a foreign country in accordance with the law of such foreign country (Foreign Shipping Company).

Article 3: The Ministry of Commerce (MOFCOM) and the Ministry of Transport of the People's Republic of China are in charge of examining and approving the establishment of wholly-owned shipping companies in China by Foreign Shipping Companies.

Article 4: The establishment of wholly-owned shipping companies in China by foreign shipping companies shall be subject to examination and approval in accordance with the maritime transport treaties and related legal documents concluded between the government of China and the governments of the Foreign Shipping Companies' home countries.

Article 5: An applicant for the establishment of a wholly-owned shipping company must meet the following conditions:

(1) having at least 15 years of experience in shipping;

(2) having a stable source of cargoes or passengers in the Chinese open port city where it proposes to establish its wholly-owned shipping company; and

(3) not having violated Chinese laws, administrative regulations or rules during the course of its business activities in China for a consecutive period of two years.

Article 6: When applying to establish a wholly-owned shipping company, the applicant shall submit the following documents:

(1) a written application;

(2) a feasibility study report;

(3) the articles of association;

(4) documentary proof of the applicant's legal status and creditworthiness;

(5) the power of attorney of the legal representative of the wholly-owned shipping company, and the names and resumes of the members of the board of directors;

(6) a specimen of the applicant's bill of lading or passenger ticket; and

(7) other documents as required by MOFCOM and the Ministry of Transport.

Article 7: Application for the establishment of a wholly-owned shipping company shall be carried out in accordance with the following procedure:

(1) The applicant shall submit the application materials to the competent provincial-level commerce department of the place where it proposes to establish its wholly-owned shipping company. The competent provincial-level commerce department shall review the materials and, after obtaining the consent of the Ministry of Transport, approve the same and issue a Certificate of Approval for Establishment of a Foreign-invested Enterprise (or a Certificate of Approval for Establishment of an Enterprise with Investment of Taiwan, Hong Kong or Macao).

(2) Upon approval of the application, the applicant shall apply for registration with the administration for industry and commerce in accordance with relevant provisions on company registration within the specified time limit and receive a business license. The applicant may carry on business operations only after it has obtained an Operating License for a Wholly Foreign-owned Shipping Company from the competent transport department with the corresponding administrative authority.

Article 8: An approved wholly-owned shipping company or branch thereof may engage in all or some of the following businesses for the vessels owned or operated by its parent company: soliciting cargoes or passengers, issuance of bills of lading or passenger tickets, settlement of shipping fees and the entry into service contracts.

Article 9: A wholly-owned shipping company may apply to establish branches in other port cities in accordance with its business needs. A wholly-owned shipping company establishing a branch shall satisfy the following conditions:

(1) it has been operating for at least one year;

(2) its parent company has a stable source of cargoes or passengers in the open port city where it proposes to establish a branch; and

(4) it and its parent company have not violated Chinese laws, administrative regulations or rules during the course of their business activities in China for a consecutive period of one year.

The application procedure for the establishment of a branch by a wholly-owned shipping company shall be carried out in accordance with the provisions of Article 7 hereof.

Article 10: At least 85% of the staff of a wholly-owned shipping company shall be Chinese employees.

Article 11: A wholly-owned shipping company shall submit a report on the preceding year's business to MOFCOM and the Ministry of Transport annually by the end of April. The business reports shall include the following main particulars:

(1) the shipping routes to Chinese ports;

(2) the total number of working personnel and the number of Chinese employees;

(3) the volume of cargoes ('0,000 tonnes), the number of passengers and the number of containers (TEUs) carried in and out of Chinese ports and the amount of freight revenues; and

(4) the gross business turnover, gross profit and amount of taxes paid for the year in question.

Article 12: The establishment of wholly-owned shipping companies in Chinese provinces, autonomous regions and municipalities directly under the central government by shipping enterprises from the Hong Kong Special Administrative Region, the Macao Special Administrative Region and the Taiwan region shall, mutatis mutandis, be carried out in accordance with these Measures.

Article 13: These Measures shall be effective as of the date of promulgation.