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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II CONDITIONS FOR ESTABLISHMENT CHAPTER III PROCEDURES FOR EXAMINATION AND REGISTRATION CHAPTER IV ANNUAL EXAMINATION AND CHANGE OF CERTIFICATES CHAPTER V BUSINESS MANAGEMENT CHAPTER VI PUNITIVE RULES CHAPTER VII SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. The present Detailed Rules are hereby formulated in accordance with the Regulations of the People's Republic of China on the Administration of the International Freight Forwarding Industry (hereinafter referred to the Regulations) promulgated by the former Ministry of Foreign Trade and Economic Cooperation upon approval of the State Council on June 29, 1995, for the purpose of maintaining the order of international freight forwarding market, strengthening supervision over the international freight forwarding industry, and promoting the healthy development of the international forwarding industry of our country. Article 2. An international freight forwarding enterprise (hereinafter referred to the international freight forwarder) may act as an agent of the consignee or the consignor of import and export cargo, or act as an independent operator engaging in international freight forwarding operations. The international freight forwarding operations of an international freight forwarder as an agent refer to the activities whereby, entrusted by the consignee or consignor of import and export cargo or their agents, it handles related operations in the name of its clients or in its own name, and collect agent fees or commissions. The international freight forwarding operations of an international freight forwarder as an independent operator refer to the activities whereby it accepts the entrustment of the consignee, consignor of import and export cargo or their agents, signs and issues transport documents, performs transport contracts and collects transport fees and service charges. Article 3. The name and logo of an international freight forwarder shall comply with the relevant provisions of the state and with its business operations, and be able to demonstrate the characteristics of the industry. Its name shall contain relevant words such as "freight forwarding", "transport services", "container transport" and "logistics", etc.. Article 4. The "scope of authorization" prescribed in paragraph 2, Article 4 of the Regulations refers to, with the authorization of the Ministry of Commerce, competent departments of commerce of the people's government of a province, autonomous region, municipality directly under the central government, and city directly under state planning are responsible for making supervision over and administration of the international freight forwarding industry in their respective jurisdictions (The Ministry of Commerce and competent local departments of commerce are hereinafter jointly called the competent departments in charge of the trade sector), Such a scope of authorization shall cover: preliminary examination on the application of an enterprise for engaging in an international freight forwarding project, the annual examination and license-change examination on international freight forwarders, business statistics, training of professionals, guidance of local trade associations in carrying out work as well as working with relevant local administrative departments in standardizing the operational behaviors of freight forwarders and rectifying the operational order of the freight forwarding market. The international freight forwarding subsidiaries, branches and non-commercial executive offices set up by enterprises directly under the departments of the State Council or by enterprises from other localities in a city directly under state planning (excluding special economic zones), shall, in pursuance of the scope of authorization prescribed in the preceding paragraph, accept the supervision and administration of provincial competent departments of commerce. No other entity may engage in the examination, approval or administration of the international freight forwarding industry without authorization from the Ministry of Commerce. Article 5. The Ministry of Commerce shall be responsible for carrying out professional training on employees of international freight forwarders and making examination on the qualifications of the training institutions. No entity without approval may engage in the qualification training of employees of international freight forwarders. The conditions for the establishment of training institutions and their training contents and teaching materials shall be separately prescribed by the Ministry of Commerce. Professionals engaged in international freight forwarding operations shall accept the training prescribed in the preceding paragraph. Upon passing the examinations, they shall obtain qualification certificates of international freight forwarding. CHAPTER II CONDITIONS FOR ESTABLISHMENT Article 6. The applicants for establishing international freight forwarders shall be an enterprise legal person, a natural person or other economic organizations, of whom the big shareholder shall be an enterprise legal person in relation to import and export trade or international freight transportation and have stable supply of cargo, and shall account for the majority shares in the international freight forwarders. No shareholders except the enterprise legal person may account for majority shares in the international freight forwarders. Article 7. An international freight forwarder shall have the enterprise legal person qualification of the People's Republic of China according to law. The enterprise's organizational form shall be a limited liability company or a joint stock company. Any entity with administrative monopoly powers shall be prohibited from applying for investing and dealing in international freight forwarding business. Carriers and other enterprises, which may entail unfair competition to the international freight forwarding industry shall not apply for dealing in international freight forwarding operations. Article 8. The operational conditions prescribed in Article 7 of the Regulations shall include: (1) Having at least five professionals who have been dealing in international freight forwarding operations for over three years and whose qualifications have been certified by their previous employers; or, they have obtained the qualification certificates issued by the Ministry of Commerce according to Article 5 of the present Detailed Rules; (2) Having a fixed place of business, and property rights certificates shall be presented in the case of self-owned housing and sites; and tenancy contracts shall be presented in the case of leased housing and sites; (3) Having necessary operational facilities, including a certain amount of telephones, fax machines, computers, short-distance transport tools, loading and unloading equipment, packaging equipment etc.; and (4) Having a stable supply of import and export cargo, which means that the amount of import and export cargo in the present area is relatively larger, that the freight forwarding industry has the conditions and potentials for further development, and that the application enterprise can get a sufficient supply of cargo. Article 9. In case the multi-modal transport business is included in the scope of business of international freight forwarding operations applied for by an enterprise, the following conditions shall also be met with in addition to meeting with the conditions prescribed in Article 7 of the Regulations and in Articles 6, 7 and 8 of the present Detailed Rules: (1) Having been engaging in the relevant operations listed in Article 32 of this Detailed Rules for over three years; (2) Having corresponding domestic and overseas agent networks; and (3) Having international freight forwarding bills of lading, which are registered and put on records at the Ministry of Commerce. Article 10. An international freight forwarder shall, when applying for establishing each subsidiary, increase its registered capital by RMB 500,000 Yuan accordingly. If the enterprise's registered capital has exceeded the minimum amount prescribed in the Regulations (RMB 5 million Yuan for sea transport, RMB 3 million Yuan for air transport and RMB 2 million Yuan for land transport and express delivery), then the excess amount can be used as the capital increased for establishing the subsidiary. Article 11. The "branch organs" mentioned in the Regulations and the present Detailed Rules refer to the branch companies. CHAPTER III PROCEDURES FOR EXAMINATION AND REGISTRATION Article 12. To deal in international freight forwarding operations, it is imperative to obtain the International Freight Forwarder Approval Certificate of the People's Republic of China (hereinafter referred to the Approval Certificate) issued by the Ministry of Commerce. The entity applying for dealing in international freight forwarding operations shall submit the following documentation: (1) The application, specifying the name of the investors, explanations to the application qualification and the application project; (2) The feasibility study report, specifying basic information, qualification explanations, existing conditions, market analysis, business forecasts, establishment program, economic budget and development budget, etc.; (3) Enterprise legal person business licenses (Photostat copies) of the investors; (4) The resolutions of the board of directors, the shareholders meeting or the general assembly of shareholders; (5) The Articles of Association (or draft) of the enterprises; (6) Information of major professionals (inclusive of educational experience, majors of study, work experiences, qualification certificates); (7) The credit standing certificates (capital verification reports of all the investors issued by accountant firms); (8) The agreement of capital contribution of investors; (9) The resume of the legal representative; (10) The format of the international freight forwarding bill of lading (transport document); (11) The letter of advance approval of enterprise name (Photostat copy, issued by the administrative departments for industry and commerce); (12) The international freight forwarder application form I (Attachment Form I); and (13) Transaction terms. With the exception of Items (3) and (11), the above-mentioned documents shall all be submitted in the original texts and annexed with official seals. Article 13. The competent departments in charge of the trade sector shall make examination on application projects, which shall include: (1) The necessity of establishing the project; (2) The authenticity and integrality of the application documents; (3) The qualifications of the applicants; (4) The credit standing of the applicants; and (5) The qualifications of the professionals. Article 14. The competent local departments of commerce shall, after making examinations on the application projects, report the preliminary opinions (including the scope and areas of business, and the proportion of capital contributions of investors as suggested for approval, etc.) and all the application documents to the Ministry of Commerce according to the time prescribed in paragraph 1 of Article 11 of the Regulations for examination and approval. Article 15. In any of the following circumstances, the Ministry of Commerce shall reject the application and explain the reasons: (1) The documentation is incomplete; (2) The submission procedures is inconformity with the requirements; or (3) The Ministry of Commerce has circulated a notice, suspending the acceptance of applications for dealing in international freight forwarding operations. Article 16. In any of the following circumstances, the Ministry of Commerce shall give a reply of disapproval upon investigation and verification: (1) The applicant is not qualified for dealing in international freight forwarding operations; (2) The applicant has been engaging in illegal forwarding operational activities within 5 years from the date of submission, and has been imposed a penalty by the administrative departments of the state; (3) The applicant willfully disguises or gives false information on submission information; or (4) Other conditions inconformity with the relevant principles of Article 5 of the Regulations. Article 17. An applicant shall, upon receiving the official reply of approval of the Ministry of Commerce, within 60 days from the date of receiving the reply, take the revised Articles of Association (original copy) of the enterprise, go to the Ministry of Commerce and obtain the approval certificate upon the strength of the introductory letter of the competent local departments of commerce. Article 18. An enterprise may, one year after its establishment and dealing in international freight forwarding operations, apply for expansion of its business scope and areas. The competent local departments of commerce shall, upon examination, report to the Ministry of Commerce for approval in accordance with the procedures prescribed in Article 11 of the Regulations. An enterprise may, one year after its establishment and dealing in international freight forwarding operations, and on the condition of having built a certain business scale, apply for establishing subsidiaries or branches. The enterprise shall present the opinions of the competent local departments of commerce of the place where the enterprise is located (in case of Beijing-based enterprises directly under the departments of the State Council, the letter of opinion solicitation from the Ministry of Commerce), make submission to the local departments in charge of business affairs of the place (excluding cities directly under state planning) where the branches or subsidiaries are to be located; in case of a city directly under state planning, submission shall be made to the Ministry of Commerce for approval in accordance with the provisions of Article 14 of the present Detailed Rules. The business scope of the branches or subsidiaries shall not go beyond that of its parent company or head office. When setting up a non-commercial executive office, an international freight forwarder shall make submission to and put on the archival files at the competent local department in charge of the trade sector at the place where the executive office is located and accept administration. Article 19. Where an enterprise files an application in accordance with paragraphs 1 and 2 of Article 18 of the present Detailed Rules, it shall submit the following documents in addition to the relevant documentations prescribed in Article 12 of the present Detailed Rules: (1) The original official reply on international freight forwarding operations (Photostat copy); (2) The approval certificate (Photostat copy); (3) The business license (Photostat copy); (4) The application form II of international freight forwarders (Attachment Form II, Attachment Form I is for the establishment of subsidiaries); (5) The operational situation report (inclusive of network construction); (6) The resumes of the legal representatives of subsidiaries or the executives of the branches; and (7) Registration form for annual examination of the previous year. Article 20. Where an enterprise applies for establishing a subsidiary, the applicant shall, upon receipt of the affirmative reply and within ninety days as of the date of the reply, present a legally valid capital verification report as well as the revised Articles of Association (the original copy) of the enterprise after the head office has expanded the registered capital according to the provisions of Article 10 of the present Detailed Rules and go to the Ministry of Commerce to obtain the approval certificate upon the strength of the introductory letter from competent local departments of commerce at the place where the branches are to be located. Article 21. In case an applicant fails to go through formalities for obtaining the certificate within a prescribed time limit, or fails to start business operation without justifiable reasons 180 days beyond the date of obtaining approval certificate, his qualification of dealing in international freight forwarding operations will be invalidated automatically unless otherwise his application for extension has been approved. Article 22. The Ministry of Commerce may, on the basis of the development and overall arrangement of international freight forwarding industry, decide to suspend accepting the application for dealing in international freight forwarding operations within a period of time or take restrictive measures. The Ministry of Commerce shall make announcement on the decisions made in pursuance of the preceding provisions. Article 23. In case an international freight forwarder has the following alterations, it shall report to the Ministry of Commerce for examination and approval, and obtain a new approval certificate: (1) Name of the enterprise; (2) Type of the enterprise; (3) Equity relationship; (4) Decrease of the registered capital; (5) Business scope; or (6) Business areas. In case of any of the following changes, it shall directly obtain another approval certificate after reporting and putting on records at the Ministry of Commerce. (1) Mailing address or place of business; (2) Legal representatives; (3) Increase of the registered capital; or (4) Department directly subordinated. Article 24. An international freight forwarder shall go though registration formalities upon strength of the approval certificate at the administrative department for industry and commerce and customs. No entity may, without obtaining the approval certificate, use the "international freight forwarding operation" or other wordings identical or similar to the meaning thereof in its business license for industry and commerce. CHAPTER IV ANNUAL EXAMINATION AND CHANGE OF CERTIFICATES Article 25. The Ministry of Commerce shall implement systems of annual examination and change of certificates on international freight forwarders. Article 26. The Ministry of Commerce shall be responsible for the annual examination on the Beijing-based enterprises directly under the departments of the State Council, and for the change of certificates of the international freight forwarders all over the country. The competent local departments of commerce shall be responsible for the annual examination on the international freight forwarders within their own districts (including the subsidiaries and branches established by enterprises directly under the departments of the State Council and by enterprises from other localities). Article 27. An international freight forwarder shall submit the annual examination registration form (Attachment III), capital verification report and business license (Photostat copy) to the competent local department of commerce (the Beijing-based enterprises directly under the departments of the State Council shall submit directly to the Ministry of Commerce) at the place where it is located before the end of March each year and apply for annual examination. The focus of the annual examination shall be laid on the examination of the management of the enterprises, and their conditions for abiding by and implementing the Regulations and other relevant laws, regulations and rules. After the enterprises have passed the annual examination, the department in charge of the trade sector shall add the seal of "passing the annual examination" to their approval certificates. Article 28. The period of validity of the approval certificate shall be 3 years. An enterprise shall, 60 days before the expiry of the period of validity of the approval certificate, file an application to the competent local department of commerce for changing the certificate, in which process, the enterprise shall submit the following documentation: (1) The registration form of certificate change application (Attachment Form IV); (2) The approval certificate (Original copy); and (3) The business license (Photostat copy). Article 29. In case an enterprise has passed the annual examination for three consecutive years, the competent local department of commerce shall submit to the Ministry of Commerce the approval certificate 30 days before the expiration of its period of validity, and apply for a new approval certificate. Article 30. When an international freight forwarder applies for changing its certificate, the competent department in charge of the trade sector shall make examination on its operational qualification and situation and shall refuse to grant a new approval certificate in any of the following circumstances: (1) Failing to comply with the provisions of Article 27 of this Detailed Rules; (2) Failing to punctually go through formalities for changing certificate; (3) Transferring stock rights without authorization; or (4) Changing of such major matters as the enterprise's name, place of business, and registered capital without authorization and failing to make submission and put on the archival files in accordance with the relevant provisions. Article 31. Should an enterprise fail to change a new approval certificate due to its own reasons, its qualification of engaging in international freight forwarding operations would be invalidated automatically at the expiration of its period of validity. The Ministry of Commerce shall make announcement on the above-mentioned conditions. The administrative departments for industry and commerce shall write off the above-mentioned enterprises or order them to go through formalities for alteration of the scope of business. Should an enterprise, which has lost its qualification of dealing in international freight forwarding operations, desire to continue with this business, it shall file another application in compliance with relevant provisions. CHAPTER V BUSINESS MANAGEMENT Article 32. An international freight forwarder may engage in management activities as an agent or independent operator. Its scope of business shall include: (1) Canvassing cargo, booking space (including ship renting, plane chartering and cabin booking), consignment for shipment, warehousing and packaging; (2) Supervision over cargo loading and unloading, container stuffing and dismantling, distribution, transit, and related short-distance transport services; (3) Declarations to the customs, the commodity inspection and checking, and insurance purchases; (4) Making, signing and issuing relevant documents and bills, payment of transport fees, settlement and payment of incidental charges; (5) Freight forwarding of international items on display, personal effects and cargo passing through the territory of a country; (6) International multimodal transport, and container transport (including container assembling); (7) International express delivery (excluding personal letters); and (8) Consultation and other international freight forwarding operations. Article 33. International freight forwarders shall engage in business activities in accordance with the business scope and areas enumerated in the approval certificates and business licenses. Article 34. The Ministry of Commerce may, on the basis of the development of the respective industry, entrust the trade associations to formulate the standard transaction clauses by referring to the international customs, and the international freight forwarders may refer to them without the approval of the Ministry of Commerce. The international freight forwarders may formulate transaction clauses by themselves, but they may not use it until the clauses have been put on record at the Ministry of Commerce. Article 35. The international freight forwarders shall submit the business statistics to the competent departments in charge of the trade sector, and be responsible for the truthfulness of the statistical numbers. The measures for the compilation of the business statistics shall be separately prescribed by the Ministry of Commerce. Article 36. The international freight forwarders shall, when accepting entrustment to handle relevant businesses as agents, sign written entrustment agreement with the import and export consignees and consignors. The disputes occurred between the two parties shall be settled on the basis of the written agreement they signed. An international freight forwarder shall, as an independent operator, when engaging in the relevant operations prescribed in Article 32 of the present Detailed Rules, sign transport documents and bills to the owner of cargo. Should a business dispute occur with the owner of cargo, it shall be settled on the basis of the transport documents and bills signed by the enterprise. When a business dispute occurs with the actual carrier, it shall be settled on the basis of the transport contract signed with the actual carrier. Article 37. The international freight forwarding bill of lading used by the international freight forwarders shall be subject to a registration and numbering system. All the international freight forwarding bills of lading signed and issued within the Chinese territory shall be submitted by the international freight forwarders to the Ministry of Commerce for registration and indicate the approval number. International freight forwarders shall strengthen management on their international freight forwarding bills of lading. No such bills of lading may be lent. In case of loss or revision of the edition, it shall be reported to and put on the archival files at the Ministry of Commerce in time. The transfer of an international freight forwarding bill of lading shall comply to the following provisions: (1) Straight bill of lading: transfer shall be prohibited; (2) Order bill of lading: to be transferred after endorsement in full or endorsement in blank; and (3) Bearer bill of lading: no need to be endorsed before transfer. The international freight forwarding bill of lading shall be subject to the system of liability insurance. Liability insurance shall be covered by an insurance company upon approval of the People's Bank of China. Article 38. As an independent operator, the term of liability of an international freight forwarder shall begin from receiving cargos and end on delivering them when it is performing or organizing the performance of international multimodal transport. The basis for their undertaking liabilities, limitations of liability, exemption conditions and preconditions for losing liability restrictions shall be specified in relevant legal provisions. Article 39. An international freight forwarder shall undertake international freight forwarding operations by using the name and number of the enterprise specified in the approval certificate, and shall print the name and number of the enterprise in major office stationery and documents and bills. Article 40. No international freight forwarder may use the registered capital within the prescribed scope for other purposes. Article 41. No international freight forwarder may transfer any international freight forwarding operation right directly or in disguised form; nor may it allow any other entity or individual to engage in international freight forwarding operations in the name of the international freight forwarder or its business department; nor may it sign any agreement with entities who do not have the international freight forwarding operation right to allow them to deal in international freight forwarding operations independently or jointly with it, to collect agent fees, commissions or get other interests. Article 42. An international freight forwarder may, an agent, collect agent fees to the owners of cargo, and may also get commissions from the carriers. No international freight forwarder may share commission with the owners of cargo in any form. As an independent operator, an international freight forwarder shall collect fees to the owners of cargo in pursuance of the relevant freight rates when engaging in the relevant operations prescribed in Article 32 of the present Detailed Rules. Under this circumstance, it is prohibited from accepting commissions from actual carriers. Article 43. The China representative office of a foreign enterprise (including that from Hong Kong, Macao, Taiwan regions; the same hereinafter) can only engage in non-directly-commercial operations in the form of representing that enterprise in making business contacts, introducing products, conducting market research, technical exchanges and other business activities within its scope of business. Article 44. An international freight forwarder shall obtain and purchase invoices from the tax authorities upon the strength of the approval certificate, and use them in accordance with the provisions of the tax authorities. Article 45. No international freight forwarder may engage in business activities by way of issuing false advertisements, sharing commissions, returning rebate or other means of unfair competition. CHAPTER VI PUNITIVE RULES Article 46. In case any international freight forwarder violates the provisions of Articles 19 and 20 of the Regulations and the provisions of paragraph 2 of Article 23, Articles 34, and 35 of the present Detailed Rules, the Ministry of Commerce shall empower the competent local departments of commerce to give it warnings and order it to correct within a prescribed time limit; if it fails to correct within the prescribed time limit, the competent local departments of commerce may suggest the Ministry of Commerce revoking its approval certificate. Article 47. In case an international freight forwarder violates the provisions of paragraph 2 of Article 17, Article 20, and Article 22 of the Regulations and the provisions of paragraph 3 of Article 18, paragraph 1 of Article 23, Articles 24, 27, 33, 36, 37, 39, 40, 41, 42, 43, 44, and 45 of the present Detailed Rules, the competent local department of commerce shall, upon the authorization of the Ministry of Commerce, and in light of the circumstances, give it warnings, or order it to straighten out by stopping business operation, or impose other penalties; in case the circumstance is serious, it may suggest the Ministry of Commerce to revoke its approval certificate. Where an enterprise has been imposed a penalty of being revoked business approval certificate, it shall go through alteration or writing-off registration accordingly at the administrative department for industry and commerce. And the enterprise may not file another application for dealing in international freight forwarding operations within 5 years. In case an enterprise, which has been imposed a penalty of making rectification by stopping business operation, resumes to carry out businesses, the following conditions shall be met with: (1) Having made rectification; (2) The main person liable has been punished; and (3) Meeting with other conditions required by the competent departments in charge of the trade sector. The competent departments in charge of the trade sector shall, after receiving the application of an enterprise for resuming business and relevant written documents, determine whether approving for its resuming of carrying out business or not. Article 48. Where an entity engages in international freight forwarding operations in violation of the provisions of the Regulations and the present Detailed Rules, the competent departments in charge of the trade sector shall ban its illegal operational activities, and the administrative departments for industry and commerce shall impose penalties on it in accordance with the provisions of the relevant laws and administrative regulations, and the competent departments in charge of the trade sector shall make announcement on it. The competent local departments of commerce shall put it on the archival files at the Ministry of Commerce after making announcement. And the entity is prohibited from applying for dealing in international freight forwarding operations independently or as a participant within 5 years. CHAPTER VII SUPPLEMENTARY PROVISIONS Article 49. The international freight forwarders may, on the basis of their own will, establish international freight forwarding associations (hereinafter referred to the trade associations). Article 50. The trade association shall be a non-profit non-governmental mass organization aimed at serving its members and carrying out work in line with its Articles of Association under the supervision and guidance of the competent department in charge of the trade sector. Its objectives are to promote the member enterprises to strengthen horizontal links, exchange information, increase mutual collaboration; to encourage and supervise over the member enterprises to operate according to law and standardize their competition, represent the interests of the industry according to law, safeguard the legitimate rights and interests of the members, and assist the relevant departments of the government in strengthening administration on the industry so as to facilitate the healthy development of the industry. Article 51. The formulation of standard transaction clauses on the international freight forwarding by the trade associations in accordance with the provisions of Article 34 of the present Detailed Rules shall be reported to the Ministry of Commerce for approval, and for the use of the enterprises in the competent industry. Article 52. The Regulations and the present Detailed Rules shall be applicable to the international freight forwarders with foreign investment, unless otherwise there are provisions in the relevant laws, regulations and rules on foreign investment enterprises, the provisions shall prevail. Article 53. The Ministry of Commerce shall be responsible for the interpretation of the present Detailed Rules. Article 54. The present Detailed Rules shall come into force as of the date of promulgation. Attachments: omitted |
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