INTRODUCTION
Cyprus has a well-established maritime infrastructure and offers substantial tax incentives for the shipping industry. It is a member of the International Maritime Organisation, the Council of Europe, the Commonwealth and many other. It has concluded bilateral agreements of co-operation in merchant shipping and double taxation treaties with a large number of countries. Cyprus accession to the European Union in 2004 has boosted the registration of vessels under Cyprus flag.
ADMINISTRATIVE AND LEGAL FRAMEWORK
Maritime Administration
All maritime matters are under the jurisdiction of the Ministry of Communications and Works. The Ministry exercises its authority through the Department of Merchant Shipping (“DMS”) which deals with the registration of ships, administration and enforcement of shipping legislation, enforcement of international conventions, investigation of marine casualties, resolving disputes on board of Cyprus flag ships and training and certification of seafarers.
Legal Framework
Shipping legislation in Cyprus is mainly based on the British model. The Register of Cyprus Ships is regulated by the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws 1963-1996. The other principal merchant shipping laws are the Merchant Shipping (Masters and Seamen) Laws 1963-2002 and the Merchant Shipping (Fees and Taxing Provisions) Laws 1992-2003.
Cyprus shipping companies are regulated by Chapter 113 of the Laws of Cyprus (as amended).
GOVERNMENT POLICY ON THE REGISTRATION OF VESSELS IN THE CYPRUS REGISTRY
Vessels of any size and type, 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 DMS.
In addition, they must also comply with the conditions stated below, according to their age and type 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 Government policy, automatically undertakes that whenever the DMS 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 or prohibition of transportation orders or any other notification published in the Official Gazette of the Republic, 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.
Further, in the case of parallel registration of a Cyprus vessel in a foreign register or in the case of a lay-up of a Cyprus vessel either in Cyprus or in a foreign country, the conditions, if any, imposed at the time of its initial registration are suspended for the duration of the status of parallel registration or for as long as the lay-up of the vessel lasts.
Any change in the mode of registration of a vessel (provisional, permanent, parallel) does not affect the conditions, if any, which currently apply to it since the time of its initial registration, provided that there is no practical discontinuity in its registration in the Cyprus Register of Ships.
Vessels not accepted for registration
The following types of vessels are not accepted for registration in the Cyprus Register of Ships:
(a) Vessels of any age constructed exclusively for inland waterway navigation;
(b) Vessels which are banned by any Memorandum of Understanding on port state control or a port state on grounds of safety, pollution prevention or for security reasons;
(c) Vessels detained by port state control authorities 3 times or more within the last 2 years prior to the date of application for registration at ports of the Paris MOU, Tokyo MOU or the US Coastguard on grounds of safety, pollution prevention or for security reasons.
Age of a vessel
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 present policy of the DMS, 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 maritime conventions as a new vessel.
GOVERNMENT POLICIES
A. CARGO VESSELS AND TUG BOATS
Cargo vessels are all merchant vessels of gross tonnage of 500 and over which have been constructed or adapted for the purpose of carrying cargo in any form. Tug boats are those with an engine power equal to or greater than 1500KW, or with an appropriate certificate of bollard pull of 20 tons or more.
1. 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.
2. Vessels over 20 years of age but not exceeding 25 years of age
A vessel in this category may be registered provided:
(a) it undergoes an entry inspection, which is completed with satisfactory results; and
(b) where it is required by legislation that the vessel should comply with the ISM Code, it is operated by a ship management company having its principal place of business in the EU. For the purpose of this policy, EU includes any Member State of the EU and/or the European Economic Area., which is certificated for compliance with the ISM Code.
3. Vessels over 25 years of age
Vessels in this category are not accepted for registration in the Cyprus Register of Ships.
4. Special Cases
Notwithstanding the provisions of paragraphs 2 and 3 above, the following vessels may exceptionally be accepted for registration in the Cyprus Register of Ships:
(a) a vessel over 20 years of age may be registered if it belongs to a fleet, which includes at least 5 vessels under the Cyprus flag aged up to 12 years, owned directly or indirectly by the same person(s), provided:
- it has not been detained by port state control authorities more than once within the last 12 months prior to the date of application for registration at ports of the Paris MOU, Tokyo MOU or the US Coastguard on grounds of safety, pollution prevention or for security reasons, and
- it undergoes an entry inspection, which is completed with satisfactory results.
(b) a vessel over 25 years of age may be registered provided:
- 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
- it has not been detained by port state control authorities more than once within the last 12 months prior to the date of application for registration at ports of the Paris MOU, Tokyo MOU or the US Coastguard on grounds of safety, pollution prevention or for security reasons, and
- it undergoes an entry inspection, which is completed with satisfactory results and is subject to subsequent annual inspections, and
- where it is required by legislation that the vessel should comply with the ISM Code, it is operated by a ship management company having its principal place of business in the EU, which is certificated for compliance with the ISM Code.
B. CARGO VESSELS WITH A GROSS TONNAGE LESS THAN 500
1. Vessels not exceeding 20 years of age
A vessel in this category may be registered without any additional conditions.
2. Vessels over 20 years of age but not exceeding 25 years of age
A vessel in this category may be registered provided it undergoes an entry inspection, which is completed with satisfactory results.
3. Vessels over 25 years of age
Vessels in this category are not accepted for registration in the Cyprus Register of Ships.
4. Special Cases
Notwithstanding the provisions of paragraph 3 above, a vessel over 25 years of age may be registered provided:
- 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
- it has not been detained by port state control authorities more than once within the last 12 months prior to the date of application for registration at ports of the Paris MOU, Tokyo MOU or the US Coastguard on grounds of safety, pollution prevention or for security reasons, and
- it undergoes an entry inspection, which is completed with satisfactory results and is subject to subsequent annual inspections.
C. PASSENGER VESSELS
Passenger vessels are those carrying more than 12 passengers in international voyages and include also self-propelled accommodation barges and any other structure used to accommodate persons on board.
1. 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.
2. 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 after the submission of the application for registration but prior to the registration of the vessel (provisional, direct permanent, parallel) in the Cyprus Register of Ships and
- it undergoes an entry inspection, which is completed with satisfactory results and is subject to subsequent annual inspections, and
- it is operated by a ship management company having its principal place of business in the EU, which is certificated for compliance with the ISM Code, and
- at least 2 cadets who are EU citizens and registered with the District Labour Office or with the Department of Merchant Shipping, are engaged for sea training for a period of up to 6 months in any one year. [This requirement is not applicable in the case of accommodation barges].
3. Passenger vessels over 40 years of age
Vessels in this category are not accepted for registration in the Cyprus Register of Ships.
4. Special Cases
Notwithstanding the provisions of paragraph 3 above, a vessel over 40 years of age may exceptionally be re-registered in the Cyprus Register of Ships provided:
- 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
- it has not been detained by port state control authorities more than once within the last 12 months prior to the date of application for registration at ports of the Paris MOU, Tokyo MOU or the US Coastguard on grounds of safety, pollution prevention or for security reasons, and
- it undergoes an entry inspection, which is completed with satisfactory results and is subject to subsequent annual inspections, and
- it is operated by a ship management company having its principal place of business in the EU, which is certificated for compliance with the ISM Code.
D. FISHING VESSELS
Fishing vessels are those vessels, which are employed in fishing operations or for the processing, storage or carriage of fish or in any operations (including transshipment of fish) ancillary thereto, but it does not include any vessel used for the transport of fish or fish products as part of a general cargo.
1. General Requirements
- 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 Environment.
- Owners of fishing vessels of any size and age must submit, as a condition for the registration of such vessels, a declaration stating that they will abide, at all times, by the prevailing government policy in respect of fishing, particularly as regards the preservation of protected species and the prohibition of the use of certain fishing equipment and adhere strictly to the relevant EU fisheries legislation and international fisheries agreements and conventions.
- The employment of a fishing vessel flying the Cyprus flag in fishing operations or for the processing, storage or carriage of fish or in any operations ancillary thereto without a fishing licence issued by the Department of Fisheries and Marine Research of the Ministry of Agriculture, Natural Resources and Environment, constitutes a breach of the Fisheries Law, Cap 135, as amended, as well as a breach of the conditions for its registration.
- Fishing vessels over 25 years of age are not accepted for registration in the Cyprus Register of Ships.
2. Special Requirements
a. Fishing vessels less than 24 meters in length
A vessel in this category over 15 years of age must undergo an entry inspection, which must be completed with satisfactory results.
b. Fishing vessels of 24 meters in length and over
- Fishing vessels which fall outside the scope of the Merchant Shipping (Harmonised Safety Regime for Fishing Vessels of 24 Meters in Length and Over) Law of 2002 (Law 56(I)/2002), as amended, should comply with the requirements of the Torremolinos Protocol or be certificated in accordance with the “Code of Safety for Special Purpose Ships” (IMO Assembly Resolution A.534(13) as amended by the IMO Resolution MSC.266(84)) or with the SOLAS 1974 Convention, as amended, whichever is applicable.
- Fishing vessels in this category must comply with the requirements of Council Directive 92/48/EEC of 16 June 1992 laying down the minimum hygiene rules applicable to fishery products caught on board certain vessels in accordance with Article 3(1) (a) (i) of Directive 91/493/EEC.
- A vessel in this category over 15 years of age must undergo an entry inspection, which must be completed with satisfactory results.
E. COASTAL / SMALL PASSENGER VESSELS AND LANDING CRAFTS
Coastal passenger vessels are those vessels carrying fare-paying passengers on coastal trips, irrespective of size.
Small passenger vessels are passenger vessels with suitable facilities for carrying up to 12 passengers in international voyages.
Landing craft are those vessels of specific design and steel construction, which are aimed primarily to carry passengers and vehicles and are capable of landing them on the beach.
- A motor vessel in this category up to 25 years, propelled primarily using an internal combustion engine, or
- a sailing vessel in this category (with or without an auxiliary propulsion engine not exceeding 7.5KW (10HP)) irrespective of age, or
- a Landing craft, irrespective of age,
may be registered provided, where it is required by legislation that the vessel should comply with the ISM Code, it is operated by a ship management company having its principal place of business in the EU, which is certificated for compliance with the ISM Code.
F. PLEASURE CRAFT
Pleasure craft are yachts or other types of vessels used exclusively for recreation and are not engaged in any commercial operations, irrespective of size.
1. Vessels not exceeding 25 years of age
A vessel in this category may be registered without any additional conditions.
2. 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.
Note:
- Pleasure craft up to 24 meters in length must comply with the provisions of the Basic Requirements (Recreational Craft) Regulations of 2003 (P.I. 307/2003), as amended, which incorporate the European Union Directive 94/25/EC.
- Pleasure craft over 24 meters in length should have a valid class certificate from a recognized organization.
G. SHIPS ENGAGED IN ACTIVITIES NOT PREVIOUSLY MENTIONED AND NON SELF-PROPELLED VESSELS
For the purposes of this policy, vessels in this category include offshore supply vessels, floating cranes, dredgers, barges, launches, support craft, research ships, tugboats not falling under section A, Mobile Offshore Drilling Units, etc.
1. Vessels not exceeding 25 years of age
A vessel in this category may be registered without any additional conditions.
2. 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, [This requirement is not applicable in the case of Mobile Offshore Drilling Units (MODU) with or without self-propulsion, where the DMS deems that, for each specific case, due to the design features of the particular vessel and the place and mode of its employment, such inspection is not necessary] and
- where it is required by legislation that the vessel should comply with the ISM Code, it is operated by a ship management company having its principal place of business in the EU, which is certificated for compliance with the ISM Code.
THE CYPRUS SHIPPING COMPANY
A. Legal Status
A vessel may only be registered in the Register of Cyprus Ships if:
1) More than fifty percent (50%) of the shares of the ship are owned:
- by Cypriot citizens or
- by citizens of other Member States (means a Member State of the European Union or other contracting party to the European Economic Area Agreement) who in the instance of not being permanent residents of the Republic will have appointed an authorised representative in the Republic of Cyprus, or
2) 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 ship management company having its place of business in Cyprus, or
- outside Cyprus or outside 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 ship management company having its place of business in Cyprus. The corporation is deemed to be controlled by Cypriots or citizens of any other Member States when more than fifty percent of its shares are owned by Cypriots or citizens of any other Member States or when the majority of the Directors of the corporation are Cypriot citizens or citizens of any other Member State.
In view of the above requirements, the first step to be taken by all non-European ship owners who wish to register a vessel under the Cyprus flag is to form a Cyprus Shipping Company (hereinafter referred to as ‘the Company’) which will acquire the vessel in its name.
The Company is registered as a private company with limited liability (limited by shares) under the provisions of the Cyprus Companies Law, Chapter 113.
For the incorporation of the Company, the filing of the memorandum and articles of association in Greek with the Registrar of Companies is required. The incorporation of the Company is evidenced by the issue of a certificate of incorporation issued by the Registrar of Companies.
The time required for incorporation is about 4 working days from the date of filing of the incorporation documents.
B. Company Formation
1. Name of the Company
The name of the Company must end with the word “limited” or “Ltd”. Prior approval of the name by the Registrar of Companies is required. Very general or deceptive names are not accepted nor are names likely to lead to confusion with existing ones. It usually takes 1- 2 working days to obtain a name approval.
2. Memorandum and Articles of Association
The memorandum must contain the objects of the Company, set out as widely as possible. These are the usual ones of a shipping company e.g. to own and operate vessels, borrow money, mortgage its vessel, etc. The articles usually adopt Table A of the Companies Law with a number of changes or additions as deemed necessary.
3. Registered address
This, by law, must be in Cyprus. It is usually situated at the offices of the lawyers who have incorporated the Company in Cyprus, unless the company has a more substantial presence in the island and operates from fully fledged offices.
4. Share capital
There is no minimum share capital of the Company prescribed by Companies Law. The domination of the capital may be in any currency. It may be paid up in full or by calls, in cash or for consideration other than cash and the shares may be allotted a par value. Any class of shares e.g. ordinary or preference, and with different voting and dividend rights, are acceptable.
5. Shareholders
The Company must have one shareholder for the incorporation of the Company. The nationality of the shareholders is immaterial. Under Cyprus law all shareholders of a shipping company may be foreigners residing outside the island.
The trust relationships are recognised under Cyprus law both by statute and in equity. The security documentation of the beneficial owner usually comprises of the following:
(i) the trust deed;
(ii) the original share certificates that are issued in the names of the nominee shareholders;
(iii) instruments of transfer of shares executed in blank and directors’ resolutions approving the transfer of shares (where nominee directors are appointed);
(iv) undated letters of resignation of the nominee directors;
General meetings of the Company may be held abroad and, as a rule, written resolutions signed by all shareholders will suffice in lieu of a meeting. Annual general meetings must be held every year, the first to be held within 18 months from the date of incorporation of the Company.
6. Directors
One or more directors may be appointed. The nationality of directors is immaterial and does not affect the status of the company in any way. Thus, there is no obligation to have local directors, unless it is considered advisable to establish local management for the company to be considered as tax resident in Cyprus. Board meetings may be held in any country of the world.
7. Secretary
The secretary is appointed by the directors and is removed by them. The nationality of the secretary is immaterial, however, it is advisable that the secretary be a company or a person resident at the place where the directors reside and that an assistant secretary be appointed in Cyprus to attend to Company annual formalities in the island. This will ensure that all company annual returns are promptly signed and filed with the Registrar of Companies by the secretary and recorded. A director (but not a sole director), unless the company has one shareholder, may also act as the company’s secretary.
8. Returns
Annual returns must also be filed with the Registrar of Companies, showing the names of the shareholders. Any charges against the company must be filed and registered. The Registry is open to public inspection.
C. Procedure for Incorporation
A limited liability company can be incorporated in one of the following ways:
- by the actual shareholders appearing as subscribers to the memorandum and articles of association and signing the same; or
- by Cypriot nominees (usually members of our law firm who are acting for the formation of the company) subscribing to the memorandum and articles of association and later transferring their subscription shares to the actual shareholders by instruments of transfer.
In order to proceed with the formation of a Cyprus shipping company, our law firm requires the following particulars:
(a) desired company name (3 alternative names should be given if time is of the essence);
(b) amount of authorised share capital;
(c) whether shareholders will subscribe to the memorandum and articles of association themselves or through Cypriot nominees;
(d) whether shares will be held in trust by Cypriot nominees;
(e) names, address, nationality and occupation of beneficial shareholders;
(f) name, address, nationality and occupation of directors;
(g) name and address of secretary.
D. Auditors and Accounts
Auditors are appointed by the annual general meeting (or by the directors until the convening of such a meeting) and are thereby removable. The books may be kept abroad and denominated in any currency.
E. Taxation
For the period ending on the 31st December 2020, no income tax shall be charged, levied or collected:
- upon the income derived by the ship owner of a Cyprus ship from the operation of such ship (with the exemption of any fishing enterprises using Cyprus as their base);
- upon the dividends paid to the shareholder or the members of a corporation, out of profits made from the operation of a Cyprus ship.
TYPES OF REGISTRATION
A. Provisional Registration
1. Administrative Procedures
Cypriot merchant shipping legislation allows for the provisional registration of a vessel and most owners usually opt to have their ship provisionally registered first. This will allow them time (up to 9 months, including a 3 month extension) during which they will be able to complete the administrative formalities for permanent registration.
The application for registration of a ship under the Cyprus flag must be made by a local lawyer to the Minister of Communications and Works through the Registrar of Cyprus Ships.
At the time of her provisional registration under the Cyprus flag a ship must be at a port so that she can be surveyed and certified on behalf of the Cypriot government. The presence of the ship at the port or place where the provisional registration will be effected is not necessary.
2. Application for Provisional Registration
In order to enable the Cyprus Shipping Registry to initiate the procedure for the provisional registration of a ship, the following information is required:
(a) name of the vessel and her flag at the time of the application;
(b) name of the person (legal or natural) applying for the registration of the vessel;
(c) name of the vessel under which she will be registered;
(d) particulars of the vessel (type, year of build, date keel of the vessel was laid, gross and net tonnage);
(e) name of the classification society with which the ship is entered. If the owners of the vessel contemplate a change of the classification society on acquiring the vessel this should also be stated;
(f) Declaration of Particulars of the company for ISM Code;
(g) intended trading area of the vessel;
(h) place where the vessel will be at the time of her provisional registration, if known. This must be communicated to the Registrar of Cyprus Ships prior to the provisional registration;
(i) the consular office where the owners wish to effect the provisional registration of the vessel;
(j) name and address of the shareholders and directors of the company in whose ownership the vessel will be registered.
3. Registration Particulars
(a) It should be noted that the vessel must be classed with one of the classification societies that the Cypriot Government recognises.
(b) The vessel must be covered by one of the radio traffic accounting authorities which the Cypriot Government recognises. All maritime radio communications accounts must be paid by an accounting authority. Payments made directly through land earth stations or international service providers are not allowed.
(c) For the purpose of activation/deactivation for maritime mobile earth stations, vessels should nominate their preferred PSA that the Cypriot Government recognizes.
4. Supporting Documentation/Information
The following documents/information must be forwarded to the Registrar of Cyprus Ships together with the application for the provisional registration of the vessel or must reach the Registrar on a later date soon thereafter but in any case prior to the dispatch of instructions for the provisional registration of the vessel under the Cyprus flag.
(a) Memorandum and Articles of Association of the Cypriot company;
(b) Certificates of Incorporation, Directors and Secretary, Shareholders and Registered Office of the Cypriot company;
(c) Resolutions of the Directors of the Company for the purchase of the vessel and its registration in the Cyprus Registry;
(d) Power of attorney authorising the person who will sign all the necessary documents on behalf and on account of the Company;
(e) Bill of Sale / Builder’s Certificate;
(f) Certificate of Deletion of the vessel / Certificate of Ownership and freedom of encumbrances from the previous registry;
(g) Confirmation of Radio Traffic Accounting Authority;
(h) Confirmation of Vessel’s Classification Society (where applicable);
(i) Continuous Synopsis Record (C.S.R.)
(j) Declaration of ownership;
(k) Appointment of Authorised Representative;
(l) Registration of a Mobile Maritime Radio Station and copy of Shore Based Maintenance Agreement;
(m) Registration of SAR Particulars;
(n) ISM forms where this is required;
(o) In the case of Parallel Registration in a foreign register, a Certificate of Parallel Registration from the foreign registry.
Upon receipt of the required documents, the Registrar of Cyprus Ships, or the consular officer of the Republic as the case may be, will then proceed with the provisional registration of the vessel.
5. Completion of Provisional Registration
Provided that the relevant fees have been paid and all the necessary documentation has been deposited either with the Registrar of Cyprus Ships or with any diplomatic mission or consular officer of the Republic, the Registrar or the consular officer who has been instructed to carry out the ship’s provisional registration will proceed to:
(a) issue a Provisional Certificate of the Cyprus Registry (form MS.5), which is valid for 6 months from the date of issue;
(b) issue a provisional radio licence;
(c) advise the vessel’ s classification society that it may proceed with the survey and certification of the vessel on behalf of the Cypriot government.
The ship owner must ensure that the ship does not leave the port where she is lying unless and until she has been duly surveyed and certificated by her classification society on behalf of the Cypriot government.
6. Extension of Provisional Registration
A 3 month extension of the ship’s provisional registration may be obtained, provided the provisional certificate of Cyprus Registry has not expired and the appropriate extension fees have been paid. For this purpose an application has to be made by the local lawyer acting on behalf of the registered owner to the Minister of Communications and Works through the Registrar of Cyprus Ships, requesting the extension of the ship’s provisional registration.
B. Permanent Registration
The permanent registration of a provisionally registered vessel must be effected within 6 months (or 9 months if the 3 month extension has been obtained) from the date on which she was provisionally registered.
1. Application and Documentation
The following documents must be submitted to the Registrar of Cyprus Ships in addition to the documents required for the provisional registration:
(a) Certificate of Survey (Form M.S.1) and Tonnage Certificate (form M.S.12 or M.S.12A or M.S.12B depending on the type of vessel) from a recognized Classification Society;
(b) Ship’s Carving and Marking Note (M.S. 32);
(c) The International Certificates from a recognized Classification Society in accordance with the relevant international maritime conventions in force;
(d) Safety Management Certificate (SMC) where this is required;
(e) Confirmation of the Customs Department on the payment of V.A.T. for pleasure craft, where applicable.
2. Measurement of the Ship’s Tonnages and Ship’s Carving and Marking
The Certificate of Survey and the Cyprus Tonnage Certificate or International Tonnage Certificate (1969) may be prepared by any one of the classification societies recognised by the Cypriot Government or by the Department of Merchant Shipping.
After receipt of the aforementioned forms, the Registrar of Cyprus Ships allots to the ship her official number (which for ships over 100 GT is identical to the IMO number) and issues the ship’s carving and marking note which is given to the owner.
The owner must then ask a surveyor of ships (surveyors of any of the recognised and authorized classification societies or of the Department of Merchant Shipping) to inspect the ship’s carving and marking. When the surveyor is satisfied that these have been made in accordance with the requirements of the aforesaid section, he will complete and sign the lower part of the note, verifying that these have been carried out and return it to the owner.
The owner should forward the duly verified Ship’s Carving and Marking Note to the Registrar of Cyprus Ships in order to enable him to proceed with the permanent registration of the vessel.
C. Parallel Registration
Options
Under Cypriot legislation parallel (bareboat) registration of vessels is possible. The legislation provides for the two forms of internationally accepted bareboat registration: ‘Parallel-in’ registration and ‘Parallel-out’ registration.
These two options offer some very interesting opportunities for leaseback, hire purchase and finance arrangements.
The administrative practice of the Department of Merchant Shipping has confirmed that the parallel (bareboat) registration of vessels under the Cyprus regime may be effected with more than 20 states whose legislation is compatible with Cypriot legislation.
1. Parallel-in Registration
This form of registration offers the possibility to a foreign flag vessel on bareboat charter to a person (legal or physical, qualified to own a Cyprus ship) to be registered in ‘parallel’ under the Cyprus flag for a period, usually 2 years, which is renewable.
Under this type of registration, the deletion of the registration in the foreign register is not required, but the foreign nationality is suspended and the foreign registry is operative only with respect to the ownership and encumbrances status of the ship.
The law of the country of the foreign registry must allow the parallel registration of the ships registered in its register.
Age Limit
The Government policy on the age limit of vessels which may be registered in the Register of Cyprus Ships (see Goverment Policy above) is applicable to the parallel-in registration of vessels.
Application and Documentation
The application for the parallel-in registration of a vessel is submitted by the bareboat charterer who must be a person (legal or physical) qualified to own a Cyprus ship under the Cypriot merchant shipping legislation (see relevant section on Registration of Ships). The following documents must be submitted to the Registrar of Cyprus Ships for this purpose:
(a) Application for parallel-in registration by a local lawyer acting on behalf of the bareboat charterer, to the Minister of Communications and Works through the Registrar of Cyprus Ships, requesting the parallel registration of the vessel in the Register of Cyprus Ships;
(b) Memorandum and articles of association of the company (bareboat charterer);
(c) Certificates of incorporation, directors and secretary, shareholders and registered office of the bareboat charterer;
(d) Resolutions of directors of the company resolving to bareboat charter the vessel and register her parallel-in in the Special Book of Parallel Registration;
(e) Power of attorney under the common seal of the company, if there is a need to authorise a third person to attend matters in relation to the parallel registration;
(f) Appointment of Authorised Representative*
(g) Tonnage certificate of the vessel;
(h) Certified copy of the bareboat charter party;
(i) Certified written consent of the owner for the parallel-in registration;
(j) Certified written consent of the mortgagees, if any;
(k) Written consent of the foreign register with an official translation;
(l) Certificate of encumbrances from the foreign register;
(m) Registration of a Mobile Maritime Radio Station;
(n) Registration of SAR particulars **
* In the case of a corporation established in the European Union or the European Economic Area
** Does not apply to non-convention ships
The following information must (where applicable) also reach the Registrar of Cyprus Ships:
(a) Confirmation of class from the head office of a recognised classification society;
(b) Confirmation from a recognised radio traffic accounting authority that they will settle the ship’s radio maritime accounts;
(c) Continuous Synopsis Record from the previous register.
Tonnage and Name of the Vessel
For the parallel-in registration, a new measurement of the tonnage of the vessel is not required.
The Certificate of Survey and the Tonnage Certificate are issued on the basis of the corresponding documents of the foreign registry. Ships registered parallel-in may keep the name of the foreign registry, but this name must not be the same as the name of a ship already registered in the Register of Cyprus Ships. Ships registered parallel-in may change their name under the same conditions as those applicable to Cyprus ships registered provisionally or permanently. In such cases, the application must be made by the bareboat charterer with the written consent of the ship owner and of the mortgagees and the submission of the Masters confirmation as to the change of name. The change of name must be notified to the foreign registry.
Status of Vessels Registered Parallel-in
Vessels registered parallel-in in the Register of Cyprus Ships must hoist the Cyprus flag and are not allowed to use the flag of the country of the foreign registry. The port of registry marked on the stern of the ship must be LIMASSOL and not that of the foreign registry.
The transfer of ownership of a vessel registered parallel-in in the Special Book of Parallel Registration of the Cyprus Register is effected in accordance with the law of the foreign register and not in accordance with the provisions of the Cypriot merchant shipping legislation. The transfer of ownership is only notified to the Registrar of Cyprus Ships who will make the necessary changes in the Certificate of Cyprus Registry. Mortgages are created only by the ship owner, and in accordance with the law of the country of foreign register in which they shall be recorded. The constitution of such mortgages and other encumbrances is only notified to the Registrar of Cyprus Ships.
The extension of the status of the parallel registration and the registration of the vessel parallel-in is allowed, so long as the prerequisite conditions according to the law applicable at the time of the initial registration continue to apply.
2. Parallel-out Registration
Cyprus ships may be bareboat chartered to a foreign person or company and registered ‘parallel-out’ in a foreign register for the duration of the charter party. This so called ‘Parallel-out’ registration allows the financing of a ship and her mortgaging under the Cyprus flag and her registration in a foreign registry through a bareboat charter arrangement.
The parallel-out registration of a Cyprus ship is possible if she is bareboat chartered to a foreign individual or corporation and the law of the country of the foreign registry allows the parallel registration of vessels of another registry, under prerequisite conditions similar to those set out for the parallel-in registration of ships in the Register of Cyprus Ships.
This type of registration is possible for Cyprus ships which are provisionally or permanently registered in the Register of Cyprus Ships. The parallel-out registration of a Cyprus ship must be approved by the Minister of Communications and Works.
Application and Documentation
The application for the parallel-out registration of a Cyprus vessel is effected by her owner. The following documents duly executed (where applicable) must be submitted to the Registrar of Cyprus Ships for this purpose:
(a) Application for parallel-out registration by a local lawyer acting on behalf of the registered owner, to the Minister of Communications and Works through the Registrar of Cyprus Ships, requesting the parallel-out registration of the vessel;
(b) Resolutions of the directors of the ship owning company resolving to bareboat charter the ship
(c) Power of attorney if a third person is signing the bareboat charter party on behalf of the owners;
(d) Certified copy of the bareboat charter party;
(e) Certified written consent of the bareboat charterer for the parallel-out registration;
(f) Original certificate of Cyprus Registry;
(g) Written consent of the foreign registry confirming also that the law of the country allows the parallel registration of the Cyprus ship in its register with an official translation;
(h) Certified written consent of the mortgagees, if any;
(i) Confirmation from a recognized radio traffic accounting authority that they will continue to settle the vessel’s radio maritime accounts;
(j) Common declaration by the ship owner and charterer that they undertake to produce to the Registrar within one month, a certified copy of the foreign certificate of parallel registration and to notify every alteration which takes place regarding the name or other particulars of the ship, during the period the status of parallel registration of the ship in the foreign register is in force.
Approval of Parallel-out Registration
Provided that the appropriate fees have been paid and all the necessary documentation has been deposited with the Registrar of Cyprus Ships, the Minister of Communications and Works may allow the parallel-out registration of the vessel for a period not greater than 3 years. Such a period is renewable if the conditions imposed on first registration continue to apply. Upon the approval by the Minister of the parallel-out registration of the vessel, the Cypriot nationality of the vessel is suspended and the Cyprus Certificate of Registration must be delivered to the Registrar of Cyprus Ships.
Status of Vessels Registered Parallel-out
Cyprus vessels registered parallel-out must hoist the flag of the foreign registry and cannot use the Cyprus flag. Also, the port of registry marked on the stern of the vessel must be that of the foreign registry.
Transfers of ownership and any transactions affecting mortgages (i.e. creation, registration, transfer and discharge) on Cyprus ships registered parallel-out, are exclusively governed by Cypriot legislation and no action in relation to these matters may be taken by the foreign registry.
Termination of Parallel-out Registration
The status of the vessels registered parallel-out continues to be in force for the duration of the charter party, if the approval of the Minister and the consent of the foreign registry are in force, but in any case for a period not greater than 3 years, unless it is renewed. The Certificate of Cyprus Registry is returned to the ship owner as soon as the parallel-out registration is terminated.
REGISTRY TRANSACTIONS AND MORTGAGES
The Register of Cyprus Ships
Transfers and transmissions of ownership, as well as registrations, discharges, transfers and transmissions of mortgages, must be recorded in the Register of Cyprus Ships. The relevant application must be submitted to the Registrar and the relevant documents may be deposited with the Registrar or a consular officer on the instructions of the Registrar.
Change of Ship’s Name
A change of the ship’s name may be effected by submitting an application to the Registrar. When the change of name is approved, a period of 3 days must lapse from the date of application before the new name can be marked on the ship and the ship’s documents be endorsed to this end. It should be noted that no two ships registered under the Cyprus flag may have either the same or closely similar names.
Deletion
A Cyprus ship must be deleted from the Register of Cyprus Ships as soon as the ownership is transferred to a person (legal or natural) not qualified to to own a Cyprus ship under the merchant shipping legislation.
A Cyprus ship may be deleted from the Registry upon the submission of an application by the owner of the ship in order for the same to be registered in a foreign registry.
No export license is required for the deletion of a vessel from the Register of Cyprus Ships. A deletion certificate or a Closed Transcript of Registry is issued as soon as the registered mortgages and other encumbrances are discharged and all matters pending with the Registry, including financial obligations, are settled.
Mortgages
Once a ship has been registered under the Cyprus flag, a mortgage can be created thereby securing a loan or other financial obligations on conditions agreed to by the parties, without the need for exchange control permission. The creation of a mortgage under Cypriot laws is not allowed on vessels registered parallel-in in the Register of Cyprus Ships.
A mortgage once created must be deposited with the Registrar of Cyprus Ships or with a consular officer on the instructions of the Registrar. Whether deposited with the Registrar or with a consular officer, the mortgage is recorded thereafter in the Register as from the date and time of its deposit and remains an encumbrance on the vessel until discharged by the mortgagees. A mortgage may be created independently of whether the ship is provisionally or permanently registered.
If the ship on which a mortgage was created belongs to a Cypriot company, the mortgage will also have to be registered with the Registrar of Companies within a maximum period of 42 days after its creation. The mortgagee’s security is protected in the case of liquidation of the ship owning company. Transfer of a mortgage may be effected by completing the statutory form of transfer and submitting it to the Registrar of Cyprus Ships or to a consular officer.
In order to discharge a mortgage, a memorandum of discharge will need to be duly executed by the mortgagee. It will then have to be attested and delivered to the Registrar of Cyprus Ships or a consular officer on the instructions of the Registrar.