‘A flag of progress and quality’ – Ship Registration in Cyprus

Inspired by the motto ‘a flag of progress and quality’, Cyprus hosts the 11^th largest merchant fleet by flag registration in the world and the 3^rd largest within the EU.

The benefits of the Cyprus flag are many and substantial, including but not limited, to:

• a favourable tonnage tax system approved by the EU,
• being a leading ship management hub,
• being classified in the ‘White List’ of the Paris and Tokyo MoUs on Port State Control,
• having more than 25 Bilateral Agreements on Merchant Shipping and more than 60 Double Tax Avoidance Treaties and
• imposing no national restrictions on seafarers.

There are three types of ship registration: provisional, permanent and bareboat charter (parallel).

A Ship may only be registered under Cyprus flag if:

• more than fifty per cent (50%) of her shares are owned by Cypriot citizens, or by citizens of other member states;
• all (100%) of her shares are owned by one or more corporations which have been established and operate:

1. In accordance with the laws of the Republic of Cyprus and have their registered office in the Republic, or
2. In accordance with the laws of any other member state and have their registered office, central administration or principal place of business within the EEA and have either appointed an authorised representative in Cyprus or ensured that 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
3. 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 ensured that 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 legislation allows for a six-month provisional registration prior to permanent registration. This gives time (of up to nine months including a three month extension) to complete the administrative formalities relating to any previous flag state and/or state of registry and those relating to the permanent registration. At the time of her provisional registration, the ship must be at a port or anchorage (not necessarily in Cyprus) where she can be surveyed and certified by the Classification Society with which the ship is classed and the other Classification Societies which may be involved on behalf of Cyprus.

The permanent registration of a provisionally registered ship must be effected prior to the expiry of the ship’s Provisional Certificate of Cyprus Registry.

When the age of the ship necessitates an entry inspection and if any additional inspections are required, these are carried out by Surveyors of the Shipping Deputy Ministry at the expense of the registered owner or registered bareboat charterer, as the case may be. The entry inspection should be carried out no later than three (3) months from the date of the provisional, or the parallel-in registration, or within one (1) month from the date of permanent registration if effected directly.

Parallel-out registration is used when a bareboat charterer wishes to register a vessel that is already registered provisionally or permanently under the Cyprus flag, in-parallel to a foreign registry. For such parallel-out registration, it is not required, nor allowed, to delete the ship from the Register of Cyprus Ships where its ownership and mortgages continue to be registered. However, the ship’s right to fly the Cyprus flag and to have the Cypriot nationality is suspended. The period of parallel-out registration may be up to three years and is renewable.

Additional requirements or conditions for the registration of ships can be found in the Government Policy on the Registrations of Ships under the Cyprus Flag

Under the Advocates Laws of Cyprus only lawyers registered as practising advocates in Cyprus are entitled to draft the necessary documents for the incorporation of Cyprus companies and the registration of ships under the Cyprus flag. Consequently, the first step to be taken in registering a ship under the Cyprus flag is to engage the services of a local registered advocate.

Our firm can assist you with, inter alia, with the following matters:

1. Incorporation of shipping companies and ship management companies;
2. Registration of a ship under the Cyprus flag;
3. Drafting and review of Loan Facility and Shipping related finance agreements;
4. Assisting with the preparation of charterparties;
5. Dispute resolution;

More information on our Shipping & Maritime Law practice may be found here.