WHY CHOOSE THE CYPRUS FLAG?

Cyprus is an excellent shipping centre combining both a sovereign flag and a resident shipping industry, as well as one of the world’s largest third-party ship management centres. The Cyprus registry ranks tenth among international fleets, with 1,857 ocean-going vessels with an aggregate gross tonnage of more than 21 million tonnes. Cyprus is one of the world’s top five ship management centres worldwide, with around 60 ship management companies in operation, employing almost 40,000 seafarers and accounting for one-fifth of the world’s third-party ship management market.

In addition to the low registration costs and tax benefits (particularly the tonnage tax scheme), Cyprus registration has a wide range of other benefits. The well-established legal infrastructure provides full protection for mortgagees and finance providers, and establishment and operating costs are low. The Cyprus flag is on the ‘white list’ of both the Paris and Tokyo Memoranda of Understanding and is not on the US Coast Guard’s List of Targeted Flag States, resulting in fewer inspections and delays.

The Department of Merchant Shipping provides a responsive, high-quality service, supplemented by maritime offices in New York, London, Rotterdam, Piraeus, Brussels and Hamburg, and a network of local inspectors of Cyprus ships covering important ports worldwide.

As well as being a signatory to all international maritime conventions on safety and pollution prevention, Cyprus has concluded bilateral agreements with more than 20 countries giving Cyprus-flag ships and their crews and cargoes national or favoured-nation treatment.

REGISTRATION REQUIREMENTS

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 merchant shipping legislation and Department of Merchant Shipping circulars and satisfy the prescribed conditions for their age and type. The maximum age limit is 25 years for cargo ships, floating production storage and offloading vessels and mobile offshore drilling units. There is no age limit for passenger vessels, provided that they pass the entry inspection.

A ship may be registered under the Cyprus flag if either:
• more than half of the shares of the ship are owned by Cypriot citizens or by citizens of member states of the European Union or the European Economic Area (EEA) (if they are not permanent residents of Cyprus, they will have to appoint an authorised representative in the country); or
• all the shares of the ship are owned by corporations operating in accordance with the laws of Cyprus or any other EU or EEA member state and having their registered office, central administration or principal place of business within the EEA; or by corporations registered outside the European Union or the EEA, but controlled by Cypriot citizens or citizens of a member state. If not incorporated and located in Cyprus, either they must have appointed an authorised representative in Cyprus or the management of the ship must be delegated in full to a Cyprus or EU ship management company located in Cyprus.

Applications for the registration of ships must be made through a Cyprus-registered lawyer and the ship must be surveyed by an approved classification society at the time of registration.

TYPES OF REGISTRATION

Ships may be registered provisionally, permanently or on a parallel basis.

A.Provisional Registration

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. In practice, the Registrar will also accept the submission of applications for registration of ships on behalf of companies under formation, so that the incorporation of the company and registration of the ship can progress simultaneously. However, the company must be duly incorporated prior to the registration of the vessel.

A ship may be provisionally registered under the Cyprus flag either in Limassol, by the Registrar of Cyprus Ships or at any diplomatic mission or consular post of the Republic of Cyprus abroad (hereinafter referred to as “consular officer”) who will act on instructions issued by the Registrar of Cyprus Ship.

An application must be submitted on behalf of the company to the Minister of Communications and Works through the Registrar of Cyprus ships, and must contain the following information:
• Name of the vessel and its flag at the time of application.
• Name of the Cypriot corporation applying for the registration of the vessel.
• Name of the vessel under which it will be registered.
• Particulars of the vessel (type, year of built, gross and net tonnage).
• 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.
• Intended trading area of the vessel.
• Place where the vessel will be at the time of its provisional registration, if known. This must be communicated to the Registrar of Cyprus Ships prior to the provisional registration.
• Name of the consular officer where the owners wish to effect the provisional registration of the vessel.
• Name and address of the shareholders and directors of the Cypriot company in whose ownership the vessel will be registered.
• Resolution of the directors of the Cypriot company resolving to acquire the vessel and register it in the Register of Cyprus Ships and the appointment of one or several attorneys who will attend the registration of the ship at the relevant consular office.
• Power of attorney empowering those concerned attend to the matters of registration.
• Declaration of ownership.
• Bill of sale whereby the ship is sold to the company, duly executed by its registered owners.
• Certificate of ownership and encumbrances from the ship’s registry attesting that the ship is free from encumbrances and that it may be transferred to another registry.
• Application for license for a wireless telegraphy and/or telephony station.

B. Permanent Registration

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 it was provisionally registered. It is not necessary for the ship to be present in a Cyprus port at the time of permanent registration.

The following additional documents must be lodged with the Registrar of Ships (if not filed at the time of Provisional Registration):
• Cyprus tonnage certificate (form MS12)
• Certificate of survey (form MS1);
• Application for registration;
• Copy of the agreement signed by the ship’s International Radio Accounting Authority.
• Copies of the ship’s statutory certificates;
• International tonnage certificate;
• Duly verified ship’s carving and marking note.

C. Parallel Registration

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.

C.1 Parallel-in Registration

This form of registration offers the possibility to a foreign flag vessel, which is on a bareboat charter to a Cyprus shipping company to be registered in “parallel” under the Cyprus flag for a period of usually two years, which is renewable. Under this type of registration, the deletion of the vessel from the foreign registry is not required, but the foreign nationality of the vessel is suspended. However, it should be noted that the above applies only where the law of the country of the foreign registry allows for the parallel registration of the ships registered in its registry.

C.2. Parallel-out Registration

With the Parallel-out Registration Cypriot ships may be bareboat chartered to a foreign person or company and registered “parallel” in a foreign register for the duration of the charter party. This allows the financing of a ship and her mortgaging under the Cyprus flag and then her registration in a foreign registry through a bareboat charter arrangement.
The parallel-out registration of a Cypriot 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 Cyprus Register of Ships.
This type of registration is possible for Cypriot ships, which are provisionally or permanently registered in the Cyprus Register of Ships.
The parallel-out registration of a Cypriot ship must be approved by the Minister of Communications and Works.

Fees

A. Application fees: Approximately €100.
B. Approval and change of ships name: Approximately €200.
C. Registration fees: The fees for the registration of a vessel are calculated by the Registrar of Ships after the submission of the relevant application according to the vessel’s gross tonnage. The minimum fee is approximately €200 and the maximum fee is approximately €5.000. The rate per tonne is 50% higher for passenger vessels and the minimum is around €400. No further fee is payable for permanent registration, as long as this takes place before the provisional registration expires.

Our services include:

Advising upon and undertaking the submission of all applications and technical documentation required for the registration of vessels under the flags of Cyprus.

Drafting and/or advising upon MoAs, related Corporate Authorities approving the sale and purchase of vessels, bills of sale, representation and attendance on behalf of sellers or buyers at closing meetings.

Drafting and/or reviewing of Loan Agreements for the purchase of vessels, security documentation  and attendance on behalf of lenders or borrowers at closing meetings.

Provision of formal Legal Opinions on the above matters.