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Which ships are eligible for registration in the national shipping register(s) and which parties may register ships?
Ships of at least six metres in length and which are less than 25 years old are eligible for registration under the Maltese flag. Ships of 15 years and over must undergo an inspection before registration by an authorised flag state inspector (at the Merchant Shipping Directorate’s request, this may be carried out in dry dock). Ships of between 10 and 15 years of age must also be inspected by an authorised flag state inspector within one month of registration. Ships may be inspected before registration at the ship owner’s request.
Section 4 of the Merchant Shipping Act clarifies that a vessel must be wholly owned by:
- a citizen of Malta;
- a body corporate established under and subject to the laws of Malta, with its principal place of business in Malta or a place of business in Malta and satisfying the shipping minister that it will ensure due observance of the laws of Malta relating to merchant shipping; and
- other persons as the minister may prescribe by regulation.
In accordance with the Ships Eligible for Registration Regulations 2003 (SL 234.23), an international owner or a citizen of a member state of the European Union, the European Economic Area (EEA) or Switzerland residing in Malta can own a Maltese ship or a share therein. An ‘international owner’ is a foreign corporate body or other entity which enjoys legal personality in terms of the law under which it has been established or constituted, or a citizen of the European Union, EEA or Switzerland not residing in Malta. An international owner must appoint a resident agent in Malta to act as the ship owner’s judicial representative in Malta and as a channel of communication between the international owner and the Maltese authorities.
Maltese law allows a foreign vessel to be bareboat registered under its flag provided that it is chartered to a citizen of Malta or to a Maltese body corporate or other person qualified to own a Maltese ship.
What are the procedural and documentary requirements for registration?
Maltese flagged vessels are initially registered on a provisional basis for a period of six months followed by a conversion to a permanent registration, which is subject to the fulfilment of requirements set out in the Merchant Shipping Act.
The initial registration takes place through submission of an application for registration and a declaration of ownership by the owner that the ship is free from registered encumbrances, accompanied by a copy of the international tonnage certificate and a confirmation that the vessel is free from halon. Further, evidence of the vessel's seaworthiness through confirmation issued by an approved classification society must also be submitted.
Operation of a vessel is allowed on submission of:
- proof of liability insurance cover in accordance with international conventions for the prevention of bunker and oil pollution (as applicable) and environmental damage caused by wrecks;
- copies of valid safety statutory certificates, safety management certificates and maritime labour certificates; and
- a copy of the long-range identification and tracking of ships conformance test report.
Applications for a minimum safe-manning certificate and a radio licence must also be submitted to the flag administration.
Permanent registration is obtained through the submission of:
- the original builder’s certificate (in case of a new build) or a bill of sale, together with the original deletion certificate;
- the certificate of survey and the international tonnage certificate issued under the authority of Malta; and
- a duly endorsed carving and marking note.
Grounds for refusal
On what grounds may a registration application be refused?
In accordance with Section 8 of the Merchant Shipping Act, registration of a ship may be refused if:
- its first construction occurred more than 25 years before the year in which the application for registration was first made (exceptions apply);
- in the minister’s opinion, registration would be detrimental to Maltese national interests; and
- the ship has been provisionally registered more than three times in succession in the name of different owners, or more than twice in the name of the same owner.
Are there any particular advantages of flying your jurisdiction’s flag?
The following advantages apply:
- reduced company formation and maintenance costs – no restrictions are imposed on the sale or transfer of shares of a Maltese shipping company owning Maltese ships and no exchange control authorisations are required for company incorporation and the taking of security for loans or other facilities over Maltese vessels owned by Maltese;
- competitive ship registration and tax costs through a tonnage tax system which incentivises registration of younger vessels through a tax calculation based on the ship's age;
- no restrictions in terms of the nationality of crew or stakeholders in a Maltese shipping company;
- high standards applied by the flag administration in terms of safety of life at sea, prevention of pollution at sea and compliance with international maritime conventions;
- Malta’s membership in the European Union and the Paris Memorandum of Understanding improve marketing opportunities of a Malta-flagged ship owner;
- ships of 1,000 gross tonnage (GT) and more benefit from exemptions on income tax (and dividends paid to shareholders); duty on transfer or assignment and donation and succession duty, and the same exemption applies to vessels of less than 1,000 GT (except for pleasure yachts) on application;
- a broad definition of ‘ships’ including oil-rigs, floating decks, pontoons and barges;
- quick procedures for the registration and deletion of vessels and the registration and discharge of mortgages;
- the flag administration is available for urgent matters around the clock;
- many consular offices around the world to provide assistance to ship operators;
- many double taxation and maritime agreements in force;
- Maltese vessels are not subject to trading restrictions; and
- Malta is a stable democracy, thus ensuring a consistent approach towards the regulation of this sector.
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