ADMIRALTY AND SHIPPING
Yiannis Papazacharia Law Office has recently opened one office in Limassol the shipping center of Cyprus, and one in Piraeus in Greece, in order to be at the heart of the industry and offer better service its clients. We have expertise in offering advice to resolving commercial disputes of a legal nature to all parties involved in the industry: owners, charterers, freight forwarders insurers etc. Our main area of work is in choice of flag and registration, claims for loss or damage to cargo, general average, salvage claims, collisions and freight disputes.
Bellow are given the reasons why leading shipowners prefer Cyprus to register their vessels. Cyprus is:
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Democratic country with a free market economy. Strategic location at the crossroads of three continents.
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Modern and efficient legal, accounting and banking services based on English practices. Liberal Foreign Direct Investment regime allowing up to 100% foreign participation in most sectors of the economy.
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No exchange control and freedom of movement of foreign currency.
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Double Tax Treaties with 40 countries.
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No tax on profits from the operation or management of a Cypriot registered vessel or on dividends received from a shipowning company.
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No capital gains tax on the sale or transfer of a Cypriot registered vessel or the shares of a shipowning company.
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No estate duty on the inheritance of shares in a shipowning company.
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No income tax on the emoluments of officers and crew.
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No stamp duty on ship mortgage deeds or other security documents. Signatory to numerous international maritime conventions.
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Bilateral agreements with 27 countries, through which Cypriot ships receive either national or favoured nation treatment in the ports of other countries. Competitive ship registration costs and annual
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Tonnage taxes. Full protection for financiers and mortgagees.
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Favourable tax regime for ship management.
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Low set up and operating costs for companies. Excellent telecommunications and easy access by air and sea.
· Excellent telecommunications and easy access by air and sea.
A Guide to Ship Registration
Registration of Ships
Conditions of Ownership
A vessel may be registered in Cyprus if:
A)
More than fifty percent (50%) of the shares of the ship are owned:
by Cypriot citizens or by citizens of other Member States who in the instance of not being permanent residents of the Republic will have appointed an authorised representative in the Republic of Cyprus, or
B)
The total (100%) of the shares of the ship are owned by one or more corporations, which have been established and operate:
in accordance with the Laws of the Republic of Cyprus and have their registered office in the Republic, or
in accordance with the Laws of any other Member State and have their registered office, central administration or principal place of business within the European Economic Area and which will have either appointed an authorised representative in Cyprus or the management of the ship is entrusted in full to a Cypriot or a Community shipmanagement company in Cyprus, or
outside Cyprus or any other Member State but controlled by Cypriot citizens or citizens of Member States and have either appointed an authorised representative in Cyprus or the management of the ship is entrusted in full to a Cypriot or a Community shipmanagement company in Cyprus. The company is deemed to be controlled by Cypriots or citizens of any other Member States when more than fifty percent of the shares belongs to Cypriots or citizens of any other Member Statesor when the majority of the Directors of the corporation are Cypriots or citizens of any other Member State.
An authorised representative may be a Cypriot citizen or a citizen of any other Member State, who is resident in the Republic, or a partnership / corporation / branch which has its place of business in the Republic and which employs permanent staff in the Republic.
In view of the above requirements, all non-European owners who wish to register their ships under the Cyprus flag may incorporate a company in Cyprus, which will either acquire the ship in its name, or bareboat charter the ship.
Practice and custom have created a special type of Cyprus shipowning company (hereinafter referred to as ‘the company’), which is limited by shares and has a nominal capital, usually Euro 1.000 divided into 1.000 shares of Euro 1 each.
The main types of vessel registration in Cyprus are Provisional, Permanent and Parallel registration
Government Policy on the Age Limit and the Registration of Vessels in the Cyprus Register of Ships
Vessels of any size and type having an age not exceeding 15 years, except cargo vessels with a gross tonnage less than 1000, passenger vessels, fishing vessels, coastal passenger and small passenger vessels, may be registered in the Cyprus Register of Ships or the Special Book of Parallel Registration as long as they comply with the provisions contained in the merchant shipping legislation and the circulars of the Department of Merchant Shipping.
Vessels over 15 years of age, cargo vessels with a gross tonnage less than 1000, passenger vessels, fishing vessels, coastal passenger and small passenger vessels, may be registered in the Cyprus Register of Ships or the Special Book of Parallel Registration under additional conditions (contained in the Government Policy on the registration of vessels in the Cyprus Register of ships), which must be fulfilled concurrently with the submission of the application for registration and must be complied with at all times while the vessel remains registered, irrespective of any subsequent transfer of ownership.
Notwithstanding the above, the owner/bareboat charterer of a vessel registered under the Cyprus flag in accordance with the said Policy, automatically undertakes that whenever the Department of Merchant Shipping deems necessary to have the vessel inspected by its own surveyors as a result of identified deficiencies or an alleged serious violation of international conventions or EU instruments, he is required to submit the vessel for inspection, at his expense, in order for the Department to determine whether the vessel meets the applicable statutory requirements.
Vessels of any age constructed exclusively for inland waterway navigation are not accepted for registration in the Cyprus Registry.
Vessels banned by any Memorandum of Understanding on port state control or a port state on grounds of safety or pollution prevention, are not accepted for registration in the Cyprus Registry.
Vessels detained by port state control at least 3 times within the last 2 years prior to the date of application for registration are not accepted for registration in the Cyprus Registry.
The age of a vessel is calculated by deducting the year when its keel was laid from the year when the application for registration of the vessel was filed with the Registrar of Cyprus Ships. For the purposes of the said Policy, the year of major conversion or reconstruction of a vessel will be taken into account for the calculation of its age provided that on the date of the conversion or reconstruction, the vessel complies with all the provisions of the international conventions as a new vessel.
A. Cargo Vessels and Tug Boats
Vessels over 15 but not exceeding 20 years of age
A vessel in this category may be registered provided it undergoes an entry inspection which is completed with satisfactory results
Vessels over 20 years of age but not exceeding 23 years of age
A vessel in this category may be registered provided:
it undergoes an entry inspection which is completed with satisfactory results
it is operated by a Cyprus or other EU* shipmanagement company having its place of business in Cyprus, which is staffed with a sufficient in number and qualifications personnel and is certificated for compliance with the ISM Code.
Vessels over 23 years of age
Vessels in this category are not accepted for registration in the Cyprus Register of Ships.
Special Cases
Notwithstanding the provisions of paragraphs 2 and 3 above, the following vessels may exceptionally be accepted for registration in the Cyprus Registry:
(A) a vessel over 20 years of age
may be registered if it is owned by a company which belongs to a group of companies having, at the time of its registration, at least 5 vessels under the Cyprus flag aged up to 12 years provided:
(i)
it has not been detained by port state control more than once within the last 12 months prior to the date of application forregistration, ongrounds of safety or pollution prevention and
(ii)
it undergoes an entry inspection, which is completed with satisfactory results.
(B) a vessel over 23 years of age
may be registered provided:
(i)
the vessel will serve the Cyprus trade and will call at Cyprus ports at least twice per month or at least 24 times in any one year, and
(ii)
it has not been detained by port state control more than once within the last 12 months prior to the date of application for registration, on grounds of safety or pollution prevention and
(iii)
it undergoes an entry inspection, as stipulated in section C of PART II, which is completed with satisfactory results, and
(iv)
it is operated by a Cyprus or other EU* shipmanagement company having its place of business in Cyprus, which is staffed with a sufficient in number and qualifications personnel and is certificated for compliance with the ISM Code.
B. Cargo Vessels with a Gross Tonnage less than 1000
Vessels not exceeding 20 years of age
A vessel in this category may be registered in the Cyprus Register of Ships without any additional conditions.
Vessels over 20 years of age but not exceeding 23 years of age
A vessel in this category may be registered provided it undergoes an entry inspection which is completed with satisfactory results.
Vessels over 23 years of age
Vessels in this category are not accepted for registration in the Cyprus Register of Ships
Special Cases
Notwithstanding the provisions of paragraph 3 above, a vessel over 23 years of age may be registered provided:
(i)
the vessel will serve the Cyprus trade and will call at Cyprus ports at least twice per month or at least 24 times in any one year, and
(ii)
it has not been detained by port state control more than once within the last 12 months prior to the date of application for registration on grounds of safety or pollution prevention and
(iii)
it undergoes an entry inspection, which is completed with satisfactory results, and
(iv)
it is operated by a Cyprus or other EU* shipmanagement company having its place of business in Cyprus, which is staffed with a sufficient in number and qualifications personnel and is certificated for compliance with the ISM.
C. Passenger Vessels
Passenger vessels not exceeding 30 years of age
A vessel in this category may be registered provided:
it undergoes an entry inspection which is completed with satisfactory results and is subject to subsequent annual inspections, and
in case it is engaged in a service which includes at least two calls per month to a Cypriot port, for a period of at least six months, at least 2 cadets who are Cypriot citizens and/or citizens of the EU who are resident in Cyprus for the last 6 months, if available, are engaged for sea going training for a period of up to 6 months.
Passenger vessels over 30 years of age but not exceeding 40 years of age
A vessel in this category may be registered provided:
an inspection of the hull, machinery and general condition of the vessel is completed with satisfactory results prior to the registration of the vessel in the Cyprus Registry, and
it undergoes an entry inspection which is completed with satisfactory results prior to the commencement of the commercial operation of the vessel and is subject to subsequent annual inspections, and
where this is required by legislation, it is operated by a Cyprus or other EU shipmanagement company having its place of business in Cyprus, which is staffed with a sufficient in number and qualifications personnel and is certificated for compliance with the ISM Code, and
in case it is engaged in a service which includes at least two calls per month to a Cypriot port for a period of at least six months, at least 2 cadets who are Cypriot citizens and/or citizens of the EU who are resident in Cyprus for the last 6 months, if available, are engaged for sea training for a period of up to 6 months.
Passenger vessels over 40 years of age
Vessels in this category are not accepted for registration in the Cyprus Register of Ships.
Special Cases
Notwithstanding the provisions of paragraph 3 above, a vessel over 40 years of age may exceptionally be re-registered in the Cyprus Registry provided:
(i)
the vessel will serve the Cyprus trade and will call at Cyprus ports at least twice per month or at least 24 times in any one year, and
(ii)
it has not been detained by port state control more than once within the last 12 months prior to the date of application for registration on grounds of safety or pollution prevention and
(iii)
it undergoes an entry inspection, which is completed with satisfactory results prior to the commencement of the commercial operation of the vessel and is subject to subsequent annual inspections, and
(iv)
it is operated by a Cyprus or other EU* shipmanagement company having its place of business in Cyprus, which is staffed with a sufficient in number and qualifications personnel and is certificated for compliance with the ISM Code.
D. Fishing Vessels
No fishing vessel, irrespective of age or size, may be registered provisionally, permanently or parallel-in, in the Cyprus Register of Ships, unless it secures beforehand the written consent of the Director of the Department of Fisheries and Marine Research of the Ministry of Agriculture, Natural Resources and the Environment.
Fishing Vessels less than 24 metres in length
A vessel in this category over 15 years of age must undergo an entry inspection which must be completed with satisfactory results.
Fishing Vessels of 24 metres in length and over
A vessel in this category over 15 years of age must undergo an entry inspection which must be completed with satisfactory results.
Fishing vessels over 25 years of age
Vessels in this category are not accepted for registration in the Cyprus Register of Ships.
There are additional requirements for the registration of fishing vessels covering, safety, fishing activities and hygiene. Interested parties should contact the Department of Merchant Shipping for further information.
E. Auxiliary Vessels, Offshore Support Vessels, Pleasure Craft, Research Ships and Mobile Offshore Drilling Units
Vessels not exceeding 25 years of age
A vessel in this category may be registered without any additional conditions.
Vessels over 25 years of age
A vessel in this category may be registered provided
it undergoes an entry inspection which is completed with satisfactory results, and
where this is required by legislation, it is operated by a Cyprus or other EU shipmanagement company having its place of business in Cyprus, which is staffed with a sufficient in number and qualifications personnel and is certificated for compliance with the ISM Code.
Interested parties should contact the Department of Merchant Shipping for further information and additional requirements.
F. Coastal Passenger Vessels, Small Passenger Vessels and Landing Crafts
A vessel in this category up to 23 years for engine propelled vessels and, irrespective of age for sailing vessels (with or without an auxiliary propulsion engine) and landing crafts, may be registered provided:
- where this is required by legislation, it is operated by a Cyprus or other EU shipmanagement company having its place of business in Cyprus, which is staffed with a sufficient in number and qualifications personnel and is certificated for compliance with the ISM Code.
Specific Requirements
Language of Supporting Documentation
Cypriot legislation provides that all documents which refer to Cypriot ships (i.e. including documents for their registration) are admissible provided that they are drawn up in a language comprehensible to the competent officers under the law for their acceptance. Such provision makes the registration of vessels faster and saves on translation expenses. In practice, most of the documents are admissible in the English language.
Ownership
The application for registration must be accompanied by documents attesting ownership and compliance with the various conditions which need to be fulfilled at the time of the provisional registration, the directly permanent registration or the parallel-in registration, as the case may be.
Entry / occasional inspection
The entry / occasional inspection is carried out by the surveyors of the Department of Merchant Shipping at the expense of the shipowner/bareboat charterer.
The entry inspection of a vessel acquired by a person qualified to own a Cyprus vessel should be carried out at the latest within 3 months from the date of provisional or parallel-in registration, or within 1 month from the date of permanent registration, if effected directly.
The annual inspection of passenger vessels should be carried out within three months before or after the anniversary date of the registration of the vessel, unless alternative arrangements are agreed with the Department of Merchant Shipping, to take place during dry-docking or before re-activation, after winter laid-up period, or during planned maintenance.
Management and Operation of a Vessel
The management and operation of a vessel is evidenced by the Joint Declaration on the Operation of a Ship.
A vessel is considered as managed and operated by a ship management company if that company holds, or is to be issued by or on behalf of the Government of the Republic of Cyprus with a valid, for the type of the vessel, Document of Compliance (DoC) or Interim DoC and the vessel is to be issued with a Safety Management Certificate (SMC) or Interim SMC by or on behalf of the Government of the Republic of Cyprus, indicating that it is operated by the said company. Alternatively, the management of a vessel shall be proved by an audit of the management company carried out to the satisfaction of the Department of Merchant Shipping. Such audit shall be carried out to the extent possible in accordance with the requirements of the ISM Code.
Request for Assessment and Certification in accordance with the provisions of SOLAS 74 and the ISM Code
The entry into force of Chapter IX of SOLAS 74, as from 1 July 2002, made the International Safety Management Code (ISM Code) mandatory for all vessels, irrespective of type, of 500 gross tonnage and upwards.
The management companies must hold a valid Document of Compliance (DoC) and each vessel should be provided with a valid Safety Management Certificate (SMC).
Cyprus has already enacted the necessary legislation and the Department of Merchant Shipping has issued a Guidance Note, which contains, among other things, the:
(1)
Notification procedure to be followed by the owner of each Cyprus ship in order to identify to the Department the company;
(2)
Additional requirements on matters to be addressed by the Safety Management System (SMS);
(3)
Authorized organizations which the owner or the company may engage for the purpose of verification and certification of the SMS together with a number of restrictions and limitations imposed on the extent and scope of the authority delegated to them;
(4)
Mandatory rules and regulations which, as a minimum, must be addressed by the SMS.
*For the purpose of this policy, EU includes any Member State of the EU and/or the European Economic Area.
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