The General Office of the Provincial Government has issued the "Measures for Mortgage Financing of Ships under Construction in Shandong Province"

Office of the People's Government of Shandong Province
Regarding the Issuance of Shandong Province's Construction of Ships
Notice on Mortgage Financing Methods

Lu Zheng Ban Zi [2019] No. 111

Municipal governments, county (city, district) governments, provincial government departments, directly affiliated institutions, major enterprises, and higher education institutions:

The Measures for Mortgage Financing of Ships under Construction in Shandong Province have been approved by the provincial government and are now issued to you. Please organize and implement them carefully based on the actual situation.

Office of the People's Government of Shandong Province
June 24, 2019
(This document is publicly released)

Shandong Province Construction Ship Mortgage Financing Method

Chapter 1 General Provisions

Article 1: In order to implement the national shipbuilding industry policy, regulate the mortgage financing behavior of ships under construction, broaden the financing channels of shipbuilding enterprises, and promote the sustained, rapid, and healthy development of the shipbuilding industry in the province, this method is formulated in accordance with the Maritime Law of the People's Republic of China, the Guaranty Law of the People's Republic of China, the Commercial Bank Law of the People's Republic of China, the Customs Law of the People's Republic of China, the Regulations of the People's Republic of China on Ship Registration, the Measures for Ship Registration of the People's Republic of China, and other laws and administrative regulations, combined with the actual situation in Shandong Province.

Article 2: These Measures apply to Shandong shipbuilding industry enterprises that comply with national industrial policies and engage in activities related to mortgage financing of ships under construction.

Article 3 The term "mortgage financing of ships under construction" as mentioned in these Measures refers to the act of the shipowner mortgaging the ship under construction as collateral to the mortgagee for financing. If the mortgagor fails to perform the debt due, the mortgagee shall have the right to realize the mortgage in accordance with the law.

The mortgagee referred to in these Measures includes policy banks, commercial banks and other financial institutions that can accept ships under construction as collateral and provide financing.

Article 4 The management department of the shipbuilding industry in Shandong Province is responsible for taking the lead in researching and coordinating the problems in the operation of mortgage financing for ships under construction; researching and formulating policies and measures to support mortgage financing for ships under construction; in accordance with national industrial policies, timely understand and grasp and recommend to relevant departments The list of enterprises with financing needs in the shipbuilding industry of Shandong Province (hereinafter referred to as enterprises with financing needs).

Article 5 The Customs shall, in accordance with the relevant provisions of the State, handle the formalities for the approval of the mortgage of goods under customs supervision.

Article 6 The maritime administrative agency shall, in accordance with the relevant provisions of the State, register the mortgage of a ship under construction.

Article 7 The People's Bank of China and the banking and insurance regulatory authorities shall formulate special policies to support the mortgage financing activities of ships under construction. The People's Bank of China released information on corporate financing needs in the Shandong Provincial Corporate Financing Service Network System, urging banking financial institutions to strengthen the docking of financing services. In accordance with the relevant national policies and the actual situation of our province, the bancassurance regulatory authority guides banking financial institutions to provide policy support for the mortgage financing activities of ships under construction.

Article 8 Financial institutions shall, in accordance with the relevant policies of the State and in accordance with these Measures and the relevant provisions, actively finance the shipbuilding industry enterprises in Shandong Province that carry out activities related to the mortgage financing of ships under construction; foreign trade companies, guarantee companies and insurance companies shall, in accordance with these Measures, participate in the mortgage financing activities of ships under construction.

Chapter II Mortgage Financing of Ships in Construction.

Article 9 The mortgage financing of ships under construction shall meet the following conditions:

(I) the mortgagor complies with the national industrial policy;

The production and operation of the (II) mortgagor are in good condition, the credit rating meets the requirements of the financing institution, no bad business behavior, no major litigation cases, etc;

(III) the mortgagor has the ownership of the mortgaged ship;

The assessment of the (IV) mortgaged ship shall be undertaken by a qualified assessment institution recognized by the financing institution (mortgagee) and shall issue an assessment report on the value of the ship (including the total value of the ship and the value of the ship under construction at the time of mortgage);

(V) the assessed value of the mortgage of the ship under construction does not exceed the contract value of the ship;

Other conditions required by (VI) financing institutions.

Article 10 When handling the mortgage financing of a ship under construction, the mortgagor shall provide the financing institution with the following information:

(I) financing application;

Copy of (II) business license;

(III) the articles of association of the company, the list of members of the board of directors and the resolutions of the board of directors;

(IV) audited financial statements and notes for the last three years and the most recent financial statements and reports. If the enterprise has been established for less than 3 years, it shall provide all annual financial statements and reports from the date of establishment, as well as the latest financial statements and reports;

(V) the text of the ship construction contract;

Declaration document (VI) the vesting of the ship under construction to the mortgagor;

If the (VII) belongs to the goods under customs supervision, the relevant supporting materials of the customs consent to mortgage shall be provided;

Other materials requested by (VIII) financing institutions.

Article 11 The main procedures for mortgage financing of ships under construction:

(I) the mortgagor to apply to the financing institution;

(II) financing institutions to meet the conditions of the application to be accepted;

(III) financing institutions to investigate and write investigation reports;

(IV) financing institutions for internal review and approval;

If the ship under (V) construction belongs to the goods under customs supervision, the financing institution shall issue a written material of intention for the mortgage loan, on the basis of which the mortgagor shall go through the formalities for the approval of the mortgage of the goods under customs supervision with the competent customs, and shall not mortgage without the consent of the customs;

(VI) the mortgagor to enter into financing contracts and mortgage contracts with the financing institution;

(VII) register the mortgage of the ship under construction;

(VIII) for financing.

Article 12 In the event of a dispute involving the mortgage of goods under customs supervision, the mortgagor or mortgagee shall promptly notify the competent customs.

Chapter III Registration of Ship Mortgage in Construction.

Article 13 When a ship under construction applies for the registration of the ship's mortgage, the mortgagee and the mortgagor shall present the following materials to the ship registration authority at the port of registry:

(I) ship mortgage contract and its main contract;

If the ownership of the ship under construction is not clearly stipulated in the (II) of the ship's ownership registration certificate or the ship construction contract, the certificate of ownership of the ship under construction signed by all parties shall also be submitted;

(III) the written documents jointly confirmed by the mortgagor and the mortgagee on the status quo of the ship and the value of the ship;

(IV) ship construction stage certificate issued by the ship inspection agency and its approval of more than 5 photos taken from different angles and reflecting the overall condition of the completed part of the ship;

(V) the declaration issued by the mortgagor that the ship has not been registered with other registration authorities for mortgage and that there is no law or regulation prohibiting the establishment of mortgage on the ship;

If the (VI) shares a ship, it shall also submit a certificate that all co-owners or more than 2/3 shares or agreed shares agree to the ship's mortgage.

Article 14 Where there is any change in the registration items of a ship's mortgage, the mortgagor and the mortgagee shall jointly apply to the ship registration authority at the port of registry for registration of the change and submit the supporting documents of the change and the relevant ship registration certificate. 

If the ship has multiple mortgage registrations and the change project involves changes in the amount of secured claims, etc., if it has an adverse effect on other mortgagors, the other mortgagee's written consent to the change shall also be submitted.

Article 15 The registration of the transfer of the mortgage of a ship shall be handled in accordance with the provisions of Article 23 of the Regulations on the Registration of the People's Republic of China Ships.

Article 16 If the registration of a ship's mortgage is canceled due to the cancellation of the ship's mortgage contract, the matter shall be handled in accordance with Article 41 of the Regulations on the Registration of the People's Republic of China Ships.

Chapter IV Supplementary Provisions

Article 17 These Measures shall come into force on August 1, 2019 and shall be valid for 4 years.

Copy to: various departments of the Provincial Party Committee, the General Office of the Standing Committee of the Provincial People's Congress, the General Office of the Provincial Political Consultative Conference, the Provincial Supervisory Committee, the Provincial Court, and the Provincial Procuratorate. The democratic parties, the provincial party committee, the provincial federation of industry and commerce.

Issued by the General Office of the People's Government of Shandong Province on June 26, 2019