On December 29, 2007, China promulgated the Administration Rule on Establishment of Ship Survey Company by Foreign Ship Survey Organization, which means China has formally opened its market in ship survey industry to foreign investment. This new law will become effective from March 1, 2008.
I. Ship Survey Activities allowed to be conducted by the ship survey company
In accordance with the Administration Rule on Establishment of Ship Survey Company by Foreign Ship Survey Organization (hereinafter refer to as the Rule), the ship survey activities allowed to be conducted by the ship survey company includes:-
a) In accordance with authorization by the flag state government, to carry out statutory survey (including plan approval) to the ship or offshore installation flying or to fly the flag of that state;
b) To carry out classification survey(including plan approval) to ship or offshore installation in above a);
c) To carry out survey (including plan approval) to key equipments, parts or materials which are used on the ship or offshore installation in above a);
d) To carry out survey to cargo container owned by foreign company;
e) Relevant survey, appraisal and certification to ship, offshore installation, cargo container other than those in above a)-d);
II. Requirements for setting up ship survey company in China
In accordance with the Rule, the conditions/requirements for setting up the ship survey company include:-
a) The registered capital shall be not less than RMB 3,000,000 (about USD 414,000). In case the ship survey company needs to set up branch in China, increased registered capital of RMB 2,000,000 (about USD 276,000) for each branch is required;
b) Business leader (for example, General Manager) who shall have college degree or above, with corresponding working experience for survey and no criminal record. The company’s employees for conducting survey shall have relevant qualification required by the Chinese government or foreign government;
c) Office place is required;
d) Apparatus, equipment and material necessary for the survey are required;
e) Quality Management System for survey is well established and operated;
f) Authorization document issued by the flag state government for conducting statutory survey.
III. Procedure for setting up ship survey company in China
In accordance with the Rule, there are two phases for setting up the ship survey company. The first phase is to submit preparation report to China Maritime Safety Administration (hereinafter refer to as Authority) along with following documents:a) Authorization document issued by the flag state government for conducting statutory survey;
b) The preparation plan for setting up the ship survey company;
c) The city where the ship survey company to be established, the area where the company will conduct survey business and the statement of the business scope for the ship survey;
d) The persons who will be responsible for setting up the ship survey company, including their name list, resumes, ID, job qualification attestation as well as the authorization letter issued by the foreign ship survey organization;
e) Foreign ship survey organization’s legal business opening certificate issued by foreign authority and its consent for setting up the ship survey company in China by the foreign ship survey organization;
f) Other documents the Authority may require.
All documents provided by the foreign ship survey organization need to be notarized and legalized in the foreign country accordingly.The Authority will examine above submitted documents within 20 working days and notify the applicant about the result.
Upon approval of the preparation report, the applicant shall complete the preparation task within one year and then go into the second phase. In the second phase, the applicant shall apply for setting up the ship survey company along with the following documents:
a) The company’s article of association and company structure;
b) Business leader’s resume and ID copy;
c) Surveyors’ list, qualifications, job qualification attestation and ID copies;
d) Capital verification report issued by China’s local accounting firm and accounting voucher of registered capital contribution;
e) Lease agreement for the company office or real estate property ownership certificate;
f) Statement regarding the apparatus and equipment required for the survey business;
g) Regulation on ship survey technology and necessary technology guide and material required for the survey;
h) Certificate proving that Quality Management System has been well established and operated;
i) Approval Notice for Using Company Name issued by Administration of Industry and Commerce;
j) Other documents the Authority may require.
The Authority will examine the above submitted documents within 20 working days and upon approval, it will issue license to the company for conducting the ship survey in China. Such license will be valid for 5 years and the company can apply for a new license when it becomes expired.
In addition, after establishment of the ship survey company, the company is required to withdraw 20% of its registered capital and deposit this money into the bank designated by the Authority. In case the registered capital is over RMB 10,000,000, 5% of the amount over RMB 10,000,000 will be withdrawn. Such withdrawn registered capital can only be used as the expense for investigation when survey accident occurs to the ship survey company.