Research On Legal Issues Of Ship Fund

China has been a shipbuilding leader, but the situation of ship finance does not look as good as the situation of shipbuilding. There have been some successful models of ship fund in foreign countries. However, the ship fund in China is still in early stages. We established China Ship Fund and Shanghai Ship Industry Fund respectively in2009and in2011, attempting to build up our own financing model of ship fund through the operation of the two ship funds above. This article analyzes the advantages and disadvantages of these two ship funds through detailed discussion of several typical models of foreign ship fund and attempts to raise a ship fund model which suits our national conditions and policy environment.The existing methods of ship finance include bank loan, financial lease, export credit, IPO, bond financing and etc. However, the shipping market has remained depressed these years due to American Subprime Crisis and European Sovereign Debt Crisis. Many European banks have been suffering heavy losses and thus their lending policies have been tightened. As a result, the methods of ship finance above cannot satisfy the financial needs of shipbuilding enterprises and shipping enterprises any more, which makes them fall into financial difficulties and face the risk of refinance.Ship fund is a collective financing method which shares the interest and risks. It attracts the social capital and is operated professionally by fund manager and fund trustee based on fund unit holder’s risk preference in order to obtain profits and reduce the investment risk and cost. There are some successful models of ship fund in foreign counties, including KG Fund Model of Germany, the Ship Trust Plans of Singapore and the Islamic Fund. The common advantages of the three models are that they are all in a good law and policy environment and encouraged by the government incentives so that they can allocate capitals and reduce cost. However, our two existing ship industry funds, namely China Ship Fund and Shanghai Ship Industry Fund, have not yet take advantage of the leverage benefit of ship industry fund due to the lack of fund lawmaking and the government’s interference. Therefore, the author attempts to raise a proper ship fund model that suits our law and policy environment from the perspective of private fund and in the aspects of organizational structure, organizational form, establishment method, collection method and exit mechanism in this article. The author holds that Chinese ship fund should adopt the institution of limited partnership in order to reduce the establishment and operation cost, allocate social resource reasonably, satisfy different needs of different investors and improve the investment performance. Meanwhile, whereas the ship industry is capital intensive industry, the author holds that ship fund should be close-ended to ensure the stability of the fund operation.