Ship Registration

Version 2 Revision No. 2  -  Last Updated : 09-10-2002

 

The Malta Flag

Throughout its long and chequered history, Malta has acted as a safe harbour for refuge, an important trading point, a staging post for rest and replenishment and a vital military and naval base.  Both in times of war and peace the Islands have featured prominently and geographically as a crucial link amongst all the key ports of the region and as a focal point for international trade.  All these factors have, indeed, served to consolidate the maritime vocation and tradition of Malta.

 

Malta possesses numerous advantages as a maritime centre, both natural and cultural.  Large, safe harbours around the Islands are plentiful.  The commercial harbours are well equipped through the use of the latest technology.  The skilled and industrious population is multilingual – Maltese and English are the official languages, while many may speak a third language such as Italian, French or German.  International communications are excellent and the Islands are politically and economically stable.

 

Malta’s ability to provide a comprehensive range of maritime service facilities has significantly enhanced its reputation as an important service centre and as a reputable flag of choice and quality.  This is evidenced by the confidence placed in the Malta Flag by international banks, financiers, institutions as well as by management companies which opt for our jurisdiction.  In fact, as at December, 2000, the total gross tonnage of vessels registered with the Malta Shipping Register stands at 28.4 million tons making Malta one of the largest fleets worldwide.

 

 

International Conventions

Malta is a member of both the International Maritime Organisation (IMO) and the International Labour Organisation (ILO) and it has ratified all the major maritime conventions including:

 

SOLAS 1974/1978; COLREG 1972; Tonnage Measurement 1969; Load Lines 1966; International Convention on Civil Liability for Oil Pollution Damage 1969; International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971; INMARSAT; London Dumping 1972; MARPOL 1973/1978; STCW 1978; Freedom of Association and Protection of the Right to Organise, 1948 (No. 87); Medical Examination (Seafarers), 1946 (No. 73); Medical Examination of Young Persons (Sea), 1921 (No. 16); Minimum Age, 1973 (No. 138); Right to Organise and Collective Bargaining, 1949 (No. 98); Seamen’s Articles of Agreement, 1926 (No. 22); Seafarers’ Identity Documents, 1958 (No. 108); and Unemployment Indemnity Shipwreck, 1920 (No. 8).

 

Malta flag ships are obliged to strictly adhere to the provisions of these international conventions.

 

In addition, Malta has a number of maritime co-operation agreements and a comprehensive network of 29 Double Taxation Treaties (DTTs). 

 

In particular, Malta has concluded 2 maritime agreements with the People’s Republic of China and the Russian Federation.  Similar treaties with several other countries are in the process of negotiation.  These arrangements, inter alia, provide various benefits to Maltese ships trading to these countries.  Malta also has a reciprocal fleet arrangement with the USA on the carriage of empty containers in the US coastwise trade exempting Malta flag ships from the relative fees of the US Jones Act.  Moreover, Maltese ships trading to Greece benefit from an exemption from taxes on their earnings by way of reciprocity.

 

The Malta flag administration also has the backing of an extensive network of consular representation which extends to most ports and cities of the world.  If necessary, the Merchant Shipping Directorate can authorise these consulates to provide specific services.

 

 

The Malta Maritime Authority (MMA)

The MMA is the Authority entrusted with safeguarding the reputation of the Maltese Flag by ensuring compliance with the main body of maritime legislation -- the Merchant Shipping Act -- a law based primarily on UK legislation as, subsequently, revised and amended.

 A 24-hours, 7-days-a-week urgency service is offered by the MMA.

 

 

Which vessels may be registered?

Any type of vessel -- from pleasure yachts to oil rigs – may be registered under the Malta Flag provided the vessel being registered is wholly owned by a Maltese citizen or, alternatively, wholly owned by a Maltese limited liability company.

 

Moreover, vessels of any age whatsoever may be registered provided that:

 

•      ships of between 20 - 24 years of age must pass an inspection by an authorised flag state inspector at an agreed port acceptable to the MMA before or within one (1) month of provisional registration; whereas

•     vessels which are 25 years old and over must pass such an inspection before being registered provisionally[1].   

 

The final decision on the seaworthiness or otherwise of the vessel is at the sole and absolute discretion of the Merchant Shipping Directorate of the MMA.

 

 

Registration Procedure

Registration under the Flag of Malta involves 2 stages:

 

A. The incorporation of a Maltese company

If the shipowner is not a Maltese citizen, he must, first of all, incorporate a limited liability company under the Laws of Malta which:

·      must have a minimum of 2 shareholders who may be non-resident individuals or companies (there are no nationality restrictions as to shareholders);

·      may have nominee shareholders if the beneficial owners wish to remain anonymous;

·      must have, at least, 1 director who may be corporate and non-resident;

·      must have a share capital of, at least, 500 Malta liri (approximately US$1,300) which must be, at least, 20% paid up (i.e. US$300); and

·      need not have its principle place of business in Malta in order to own a Maltese ship.

 

Registration is a low-cost and straightforward operation that may be done in a matter of hours on the basis of a Power of Attorney and Declaration sent by the shareholders to their representative in Malta [please view Appendix 4 for a draft copy of the Power of Attorney & Declaration] and once all the administrative details and authorisations are in order.

 

B. Actual registration of the vessel with the MMA

This, in turn, involves 2 distinct stages:

 

I. Provisional registration

Provisional registration which, in terms of Law, has the same effect as permanent registration, can be effected very quickly.  A vessel is registered provisionally for 6 months (extendible for a further 6 months) by filing a standard Application Form completed by the owner or by his authorised representative; an application in writing for a change of name, if required; and attaching thereto the documentation listed in Appendix 1.

 

On completion of the above procedures, the Registrar of Shipping will provide the shipowner with a Certificate of Provisional Registration.

 

II. Permanent registration

A vessel will obtain permanent registration on presentation, during provisional registration, of certain additional documentation as listed in Appendix 2.

 

A permanent certificate of registry, once issued, may be renewed annually upon payment of annual registration fees and subject to compliance with safety requirements as laid down by Law.

 

 

 

 

Bareboat charter registration

Maltese law provides both for bareboat charter registration of foreign ships under the Malta Flag and also for the bareboat charter registration of Maltese ships under a foreign flag.

 

Vessels so registered under the Malta Flag enjoy the same rights and privileges, and have the same obligations, as any other ship registered under the Malta Flag.

 

All matters regarding title over the ship, mortgages and other encumbrances are governed by the laws of the underlying registry whereas all issues concerning the operation of the vessel fall under the jurisdiction of the bareboat charter registry (in this case the Malta Flag).

 

The requirements for bareboat charter registration in Malta are:

·      that the vessel must be foreign owned;

·      the vessel cannot be registered in another bareboat registry;

·      the vessel must be bareboat chartered to a Maltese citizen or to a Maltese company;

·      the Minister of Transport shall have declared the underlying registry of the vessel a ‘Compatible Registry’; and

·      filing an Application Form duly completed by the charterer or by his authorised representative accompanied by certain documentation listed in Appendix 3.

 

The duration of such registration shall be for a period not exceeding the duration of the bareboat charter or the expiry date of the underlying registration, whichever is the shorter period, but under no circumstances for a period exceeding 2 years, although subsequent extensions may be permitted.

 

 

Mortgages

A ship registered in Malta, including all its equipment, machinery and other accessories may be put up as security for a loan by way of mortgage. 

 

A mortgage over a Maltese ship may be recorded in the register as soon as the vessel is registered.  Transfer and discharge of mortgages may be effected immediately on presentation of the relative documents. 

 

Maltese mortgages provide good security for banks and other financial institutions because, inter alia:

·      they enjoy a high ranking position;

·      a shipowner may not delete a vessel from the Maltese register without the mortgagee’s prior written consent;

·      a vessel may not be struck off the register before 1 month’s notice being given to the mortgagee and shipowner by the Registrar of Shipping;

·      a mortgagee may take over and complete registration formalities himself (including applying for extensions, paying fees etc.) in order to protect the status of the ship and the validity of its registration;

·      the Registrar of Shipping is bound, upon transfer of a vessel to new Maltese owners, to inform the mortgagee of such transfer;

·      the vessel may not be sold to foreign nationals without the mortgagee’s consent;

·      mortgages may be enforced without the need of lengthy Court proceedings;

·      the mortgage attaches to any insurance proceeds; and

·      a mortgagee may prohibit the registration, without his prior written consent, of second or subsequent mortgages by including a relevant clause in the registered Mortgage Deed.

 

Foreign mortgages are recognised and granted the same status as mortgages under the Maltese Shipping Act provided such foreign mortgages are validly recorded in terms of the relevant foreign law and certain other conditions are fulfilled.

 

 

Advantages of registering a vessel under the Malta Flag

The procedure for the registration of ships is well-defined and straightforward.

 

Owners, charterers and financiers of Maltese ships may benefit from highly favourable tax rates on profits derived from the ownership, sale, operation and charter of Maltese ships. 

 

In addition, there is complete exemption from stamp duties payable on the sale or transfer of a ship and the allotment of any share or stock of a company owning such a ship, as well as exemption from any succession duties, exchange control, capital gains tax or VAT.  

 

There are no restrictions on the nationality of the Master, officers and crew of vessels registered under the Malta flag.  Having said this, however, although there is no obligation whatsoever to employ Maltese residents, it is also true to say that Malta enjoys the reputation of having good and reliable manpower and Maltese seamen are, indeed, well-versed in seamanship thereby constituting a valuable asset.  To promote the employment of Maltese seafarers, there is a small reduction in fees for each Maltese seafarer employed.  

 

No restrictions on the sale or transfer of shares of a company owning Maltese ships.

 

Likewise, there are no restrictions on the sale and mortgaging of Maltese ships.

 

Preferential treatment of Maltese ships in certain ports.

 

It is possible to register vessels which are still under construction as well as other marine structures which do not fall within the strict definition of ships such as oilrigs, floating docks, pontoons and barges.

 

 

 

The Ship Management Company

It is possible to incorporate so-called Ship Management Companies whose objects are expressly limited to the management, administration or operation of ships of not less than 1,000 nett tons, whether registered in Malta or elsewhere.  Through the use of nominee shareholders and directors, complete anonymity is guaranteed to the beneficial owners of such Ship Management Companies. 

 

Ship Management Companies are to be incorporated as International Trading Companies (ITCs) and, as such, are taxed at the rate of 27.5% (instead of the normal corporate tax of 35%) if the shareholders are non-resident.  This means that the company will receive a refund of 7.5% tax.  Moreover, upon a distribution of dividends to the non-resident shareholders (who may also be limited liability companies wholly owned by non-residents) the non-resident shareholders are entitled to a refund of two-thirds of the tax paid by the company which means that, effectively, their net effective tax liability is 4.17%.   For further information on ITCs please refer to our fact sheet entitled ‘International Trading Companies’

 

In addition, there is complete exemption from Exchange Control, Death and Donation Duties, Stamp Duties, Customs Duties, Social Security contributions, Capital Gains Tax and any withholding taxes.

 

 

Maritime litigation and arbitration

Many cargo claims and ship arrests in Malta are settled through maritime litigation or arbitration.  Ships can be arrested in Malta by way of an in rem action before the Civil Court.  Cargo claims in Malta may be brought before the Civil Courts and may be submitted to arbitration under the recent Malta Arbitration Act.

 

Downloads:

·                     This Document in PDF Format.

·                     Appendx I        : Documents required for Provisional Registration

·                     Appendx II       : Documents required for Permanent Registration

·                     Appendx III     : Documents required for Bareboat Charter

·                     Appendx IV     : Special Power of Attorney and Declaration

·                     Schedule of Professional fees re Shipping Companies