Due diligence

Demonstrating title or legal ownership

How does one demonstrate title to or legal ownership of a vessel registered under the laws of your jurisdiction?

Registration of a vessel, as supported by a certificate of registry, constitutes prima facie evidence of holding ownership title. Legal ownership of a vessel registered under Maltese law is demonstrated through a builder’s certificate, bill of sale or another document of title, such as an adjudication order pursuant to a judicial sale by auction through which ownership of a vessel is transferred.

Although a shipowner is obliged to provide the Maltese Registrar of Ships with the original builder’s certificate, the original bill of sale or another document of title within one month of the provisional registration (this period can be extended to two months), in practice the registrar accepts scanned copies.

The Merchant Shipping Act stipulates that a registered ship (or a share of a ship) must be transferred by a bill of sale, and requires the bill of sale to be produced to the registrar, who enters the name of the transferee in the vessel’s register as the vessel’s owner and endorses the bill of sale with the date and time the entry was made.

If a vessel is transferred causa mortis owing to the death of an owner, the beneficiary, provided he or she is qualified to own a Maltese ship, must sign a declaration of transmission. The declaration must be accompanied by evidence of the transfer that a competent court would accept as proof. As with a bill of sale, the declaration must be produced to the registrar, who enters the identity of the recipient in the vessel’s register as the new owner.

These entries in a vessel’s register are ascertainable on a search of the vessel’s public register. The current ownership position would feature in a transcript of register issued by the registrar.


How can one determine whether there are any liens recorded over a vessel?

Maltese law refers to mortgages, certain possessory liens and special privileges over vessels. In addition, there is also the privilege granted to the seller for the price of an item sold under the provisions of article 2009(d) of the Civil Code.


Special privileges

Special privileges are akin to maritime liens, in that:

  • they attach to the vessel and enjoy a droit de suite in the event of a private sale of the vessel;
  • they constitute a maritime claim in rem against the vessel; and
  • they also give rise to an established ranking priority.


As special privileges are not recorded in the vessel’s register, there is no objective way to ascertain whether a vessel is subject to a particular special privilege. Special privileges are temporal in nature, so a maritime claim that constitutes a special privilege over a vessel can, with the passage of time and change of circumstances, no longer constitute a special privilege. Therefore, whether or not a maritime claim gives rise to a special privilege must be determined on a case-by-case basis, as and when the claim is advanced.



Mortgages, as well as any privilege granted by law in favour of the unpaid seller, must be drawn up on the applicable statutory forms and registered according to law. Therefore, their existence may be determined upon a search of the vessel’s register, and they feature in a transcript of the shipping register.

If a vessel is entered in the Maltese bareboat charter registry, details of any registered encumbrances would need to be ascertained from that vessel’s underlying or principal registry.

How does one determine whether there are any security agreements, liens, charges or other encumbrances granted by a vessel owner or affiliated party who might be a borrower, guarantor or other credit party in connection with a vessel finance transaction?

Only mortgages and privileges granted to an unpaid seller as security for the balance of a vessel’s price are recorded in the vessel’s register.

A mortgage would refer to the underlying documents, such as a loan or guarantee agreement, the obligations that are secured by the mortgage, and the mortgagee concerned in whose favour the mortgage is executed.

The law requires that to be effectual in regard to the vessel concerned, a privilege in favour of the unpaid seller has to be entered into the register of the vessel within two days of the date of the sale.

A power of attorney or a mandate (irrevocable or otherwise) issued by the mortgagor, granting powers relating to the exercising of rights relating to the vessel or the closure of the register on behalf of the registered owner or grantor, can be recorded in the register.

Additionally, if a pledge of shares affecting the securities of a Maltese-registered company is made, a notice of pledge is recorded in that company’s public register, as maintained by the Registrar of Companies. This contains the date of the pledge, names of the pledgor and the pledgee, and details of the pledged securities. As Maltese company law does not provide for a register of charges, no other charges are recorded in a company’s public register.

Public registry searches

Can one determine whether an obligor registered in your jurisdiction is duly organised and in good standing from a search of a public registry?

If the obligor is a Maltese-registered company, a search may be carried out on that company’s public register, which is maintained by the Registrar of Companies. An official certificate of good standing may also be obtained.

The company’s public register may contain other information, such as:

  • the existence of a pledge of shares, which the Registrar of Companies may have been notified about, from which time the pledge would affect third parties;
  • whether a voluntary dissolution has been filed, and a liquidator appointed;
  • whether an injunction preventing the transfer of shares in the company has been issued by a competent court on the request of a creditor, and whether the Registrar of Companies has been notified; or
  • whether a court application has been filed by a creditor for the dissolution and winding up of the company, and the Registrar of Companies has been so notified.

Can the shareholders or other equity interest holders, directors and officers or other authorised signatories of an obligor organised in your jurisdiction be determined from a search of a public registry? If not, how are these parties customarily identified?

Malta does not operate an offshore regime. The names of all registered shareholders, debenture holders, directors, legal representatives and appointed secretaries are recorded in the company’s register entry, where required, and so can be determined from a search of the public registry. Such searches can be carried out online. For fiduciary shareholders, the names of the ultimate beneficial owners will not appear.

However, pursuant to the Companies Act (Register of Beneficial Owners) Regulations 2017, details of relevant ultimate beneficial owners of companies have been recorded in a Register of Beneficial Owners maintained by the Registrar of Companies since 1 January 2018. The Maltese authorities can access this register, in accordance with data protection requirements, and by persons providing services in or from Malta under the Prevention of Money Laundering and Financing of Terrorism Regulations. Other people or organisations may access the registry after submitting a written request demonstrating and justifying a legitimate interest.

Debt obligation

What corporate or other entity action is necessary for an obligor to enter into or guarantee a debt obligation? When is action by the board of directors or other governing body required? Must shareholders approve a guarantee?

Much will depend upon the particular provisions of the memorandum and articles of association of the company concerned. Typically, legal representation of a Maltese company would be vested in the board of directors or one or more directors. In all cases, it would be prudent to procure the appropriate resolutions from the directors, resolving to enter into an obligation and to appoint one or more persons as the company’s attorneys to execute the authorised transactions.

Shareholders are not required to approve guarantees unless the company’s memorandum and articles of association make such provisions necessary. However, it is prudent to obtain shareholder approval, and, especially when dealing with third-party debt guarantees, to check that the objects clause in the memorandum of association authorises the company to make the security available.

Obligations of foreign lenders

Must foreign lenders qualify to do business in your jurisdiction to extend credit to a borrower organised in your jurisdiction? Will foreign creditors be deemed resident as a consequence of making a loan or other extension of credit to an obligor within your jurisdiction?

Foreign lenders do not have to qualify to do business in Malta in order to extend credit to a borrower who may be organised and established in Malta, unless the lender wishes to operate as a financial institution in or from Malta. However, a mortgage to secure a future obligation can only be granted in favour of a credit institution in an approved jurisdiction or such other organisation as permitted by means of a notice issued by the minister responsible for shipping.

Foreign creditors will not be deemed to be resident or to have a permanent establishment in Malta as a result of making a loan or extending credit to an obligor organised and established in Malta.