There is a vast array of benefits available to those wishing to register a shipping vessel under the Cypriot flag. In terms of geographical location, infrastructure, safety and efficient operations Cyprus can offer substantial advantages. Underlying the entire system is a highly profitable economic environment which offers major tax advantages and other fiscal incentives to those who operate under the Cyprus flag.
OWNERSHIP OF A VESSEL
A vessel may apply to be registered under the Cypriot flag if: (i) more than 50% of the shares of the vessel are owned by Cypriot citizens or by citizens of EU countries (provided that they are either permanent residents in Cyprus or have an authorised
representative in Cyprus); or (ii) all of the shares in the vessel are owned by:
- a Cyprus Shipping Company;
- OR an EU company with either an authorised representative in Cyprus or which has entrusted management of the vessel to a Cypriot or Cyprus shipping company;
- OR a non- EU company which is controlled by Cypriot or EU citizens with either an authorised representative in Cyprus or which has entrusted management of the vessel to a Cypriot or Cyprus shipping company.
This effectively means that any non-EU citizen who wishes to register a vessel under the Cyprus flag must do so through the medium of a Cyprus shipping company.
REGISTERING A CYPRUS SHIPPING COMPANY
The company will specify in its objects that it is a shipping company and must have a registered address on the island of Cyprus. Michael Chambers and Co LLC is able to provide its clients with a registered address if they do not wish to operate fully fledged offices from the island.
The company will be a limited liability company. At least one shareholder will be required but his nationality is irrelevant. One or more directors may also be appointed and a secretary will also need to be selected. It is usually recommended that a secretarial presence in Cyprus is ensured in order to maintain smooth running of the entity. Furthermore auditors will be appointed but it
is acceptable for the books to be kept abroad and in any currency.
The company will most often be constituted with a nominal share capital of €1.000 divided into 1000 shares of a value of €1 each.
REQUIREMENTS FOR REGISTRATION
In order for a ship to be registered under the Cypriot flag certain formalities must be complied with. Of course, ownership of the vessel must comply with the governing rules and all documentation should be submitted in a language which is understandable by the governing authorities (in practise this is usually English). Upon entry to the Register, the Department of Shipping will carry out an inspection of the vessel and thereafter will do so on an annual basis.
TYPES OF VESSEL REGISTRATION
PROVISIONAL REGISTRATION
This is a form of registration which is initially granted in order to allow the ship owner time (up to 9 months) to complete the necessary formalities for full permanent registration. An application will be submitted by a lawyer on behalf of the ship owner. At the time of application the ship must be available for inspection by Cypriot inspectors.
The application will include full details of:
- Vessel name and current flag;
- Owner;
- Name under which vessel will be registered;
- Full details of vessel;
- Classification Society applicable;
- Declaration of particulars of company for ISM code;
- Intended trading zone;
- Location of vessel at time of provisional registration;
- Relevant consular office;
- Names and addresses of shareholders and directors of ship owning company.
Once all formalities have been complied with and the necessary information and documents submitted to the authorities, a provisional certificate will be issued with a provisional radio license. Provisional registration will be effective for 6 months with a possible further extension period available of 3 months (again this is obtained by submission of a relevant application).
PERMANENT REGISTRATION
Once a provisional registration has been obtained, the application for permanent registration must be prepared. There are a number of additional papers to be submitted, including: certificate of survey; tonnage certificate; ship’s carving and marking note; certificates relating to the Classification Society; ship management certificate and confirmation of payment of VAT. Provided that all is in order and the appropriate fee is settled then registration will take place.
PARALLEL REGISTRATION
Parallel registration is permissible under Cyprus law.
Parallel-in registration allows a foreign vessel on bareboat charter to be registered in parallel under the Cypriot flag for a limited period. The period can be renewed where necessary. The relevant application will be submitted by the bareboat charterer and will be granted by virtue of the vessel being listed in the Special Book of Parallel Registration in the Cyprus Register.
Parallel-out registration allows Cyprus flag ships to be bareboat chartered to a foreign person or company and registered “parallel out” to a foreign register for a limited period of time. A relevant application must be made by the owner of the vessel and upon
consideration of the appropriate application and supporting documentation, permission may be granted for a period of up to 3 years, although such a period may be renewed where appropriate. In such cases, the Cypriot nationality of the vessel will be suspended and the Cyprus Certificate of Registration will be held by the Registrar.
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Cyprus has forged itself as one of the largest and most successful shipping centres in the world. Options for ship ownership are
available for both Cypriot, EU and non-EU citizens and a provisional registration may be made initially whilst documentation for permanent registration is completed. Parallel-in and parallel-out options are available meaning that it has never been easier to
take advantage of the huge benefits that registration under the Cyprus flag can offer. For information regarding some of
these advantages, please see our article Advantages of Registration under the Cyprus Flag.
Michael Chambers and Co LLC are experts in shipping law and can assist with all aspects of ship ownership and management. In order to speak to a member of our team, please contact us.
