The term flag of convenience describes the business practice of registering a merchant ship in a sovereign state different from that of the ship’s owners, and flying that state’s civil ensign on the ship. Ships are registered under flags of convenience to reduce operating costs or avoid the regulations of the owner’s country. The closely-related term open registry is used to describe an organization that will register ships owned by foreign entities.
Identifying vessel ownership in the commercial shipping industry is of critical importance for successful transport of goods. For this reason, merchant ships are required to register under a national flag to determine the legal jurisdiction under which they operate and pay their associated tax obligations. The business practice of declaring a “flag of convenience” may allow a ship to reduce operating and tax costs by also registering under the flag of another country in addition to its home registry. Possessing an actual place of business in the flag country is not required. A few examples of flags of convenience in widespread use are those of the Marshall Islands, Cyprus, Liberia, and Panama.
Flag State Regulatory Control
A ship’s flag state exercises regulatory control over the vessel and is required by international agreements to inspect the vessel regularly, certify the ship’s equipment and crew, and issue safety and environmental protection documents. The organization that actually registers the ship and certifies it for compliance is known as the “registry.” Registries may be either governmental or private agencies or, as is the case in the United States, a hybrid of the two. In the United States, pursuant to the Alternative Compliance Program, the government-run registry can assign a private industry third party to administer inspections.
APPLICATION FORM TO REGISTER A SHIP
The form should be completed as appropriate. Upon completion must be stamped and signed by ship’s owners
BILL OF SALE
In case that the ownership under the flag will be the same as under ship’s existing flag, a copy of the last Bill of Sale is required. In this Bill of Sale the signature of sellers must be notarized and the copy should be aythenticated as “certified true copy of the original one” by a notary, lawyer, consul, or any other official authority.
In case that a new Bill of Sale is executed and consequently the ownership under the flag will be a different one than the owner under existing flag, this Bill of Sale is required. In this Bill of Sale a notary, lawyer, consul, or any other official authority must verify the signatures of both Sellers and Buyers.
An updated good-standing certificate of the owning company of the vessel is necessary.
NON OF ENCUMBRANCE OR DELETION CERTIFICATE
Also is mandatory an updated Non of Ecumbrances or Deletion certificate of the vessel from its existing registry.
CONFIRMATION OF SHIP’S CLASS SOCIETY
A fax confirmation should be send directly to our company by the ship’s Classification Society confirming that they will issue its Class & Trading certificates under the flag upon the completion of its registration and surveys.
.CONFIRMATION FROM RADIO TRAFFIC ACCOUNTING AUTHORITY
A fax confirmation addressed to the “Maritime Administration of the flag” must be sent to this company directly from ship’s Radio Traffic Accounting Authority confirming that the vessel is in contract with them.
CONFIRMATION FROM VESSEL’S P&I CLUB
A fax confirmation addressed to the “Maritime Administration of the flag” must be sent to this company directly from vessel’s P&I club confirming that the vessel has be insured.
Copy of ship’s full term ITC”69 (International Tonnage Certificate 1969) under the existing flag is required.
COPIES OF SHIP’S EXISTING GOVERNMENTAL CERTIFICATES
Copies of Registration, Radio Station License and Minimum Safe Manning certificates of the vessel under the existing flag are also required.
If ISM Code is applicable for your vessel, copies of existing DOC and SMC certificates of it required to be submitted.
By the receipt of all previous mentioned documents through fax or e-mail and provided the simultaneously settlement of the fee applicable, the Provisional Registration can be executed by us.
If ISPS Code is applicable for your vessel, a copy of the management agreement between vessel’s owners and the managing company is required.
Application for Continuous Synopsis Record (C.S.R.) Form
If ISPS Code is applicable for your vessel, the owners/managers must apply for the issuance of the C.S.R. under the Union of Comoros Flag, using the specifing form.
Declaration of Company Security Officer (C.S.O.) Form
If ISPS Code is applicable for your vessel, the relative form is required.
Continuous Synopsis Record from the previous flag
If ISPS Code is applicable for your vessel, the existing C.S.R. from the previous flag is required.
Later on within three months from the date of Provisional Registration of the vessel, following documents must be submitted to us in original in order be able to proceed in ship’s permanent registration:
- Original Application Form
- Original notarized Bill of Sale
- Original Deletion Certificate from previous Flag
- Original ships Carving and Making note Filled in and Stamped by class surveyor
- Original radio installation survey report Filled in & Stamped by Class Surveyor and vessel’s operator/master.
- Copies of valid Class & Statutory Certificates plus SMC (if applicable)
- Copy of ISM DOC of the vessel’s operator
- Copy of valid ISSC (if the ISPS Code is applicable)
- C.S.R. from the previous flag indicating the data that the vessel was deleted from the registry, according to the requirements of SOLAS Convention, Ch. XI, Reg. 5, Para. 7 (if the ISPS Code is applicable)