Transfer of boat ownership under the UK flag

The procedure of transferring the ownership of a UK registered yacht, whether pleasure or commercial is simple and fast. Upon the sale of the yacht, the new owner can choose to keep the yacht UK registered.

 

The following documents must be submitted to the Registry along with the appropriate fee to complete the change of ownership.

 

Commercial Yachts Registered on Part 1 of the UK Ship Register

 

  • Original Certificate of British Registry
  • Bill of Sale

 

    • If there is a mortgage outstanding against the transferor, the yacht ownership can still be registered, provided that this is indicated on the bill of sale form. It is important to note that the new owner does not take an ownership of the existing mortgage. The mortgage will merely remain on the register as historic in the name of the transferor.
  • Declaration of eligibilityto be completed in full and, the property in a ship is divided into 64 shares
  • A UK representative must be appointed if none of the owners making up the majority interest resides in the UK
  • Certificate of Incorporationif the registering owner is a registered company
  • Valid coding certificate completed by a class/certifying authority, for all commercial yachts under 24m.

 

  • For a commercial yacht over 24m a large yacht certificate issued by Ensign is required. The certificate must be in the name of the new owner or the managing agent.

 

 

Pleasure Yachts Registered on Part 1 of the UK Ship Register

 

  • Original Certificate of British Registry
  • Bill of Sale

 

    • If there is a mortgage outstanding against the transferor, the yacht ownership can still be registered, provided that this is indicated on the bill of sale form. It is important to note that the new owner does not take an ownership of the existing mortgage. The mortgage will merely remain on the register as historic in the name of the transferor.
  • Declaration of eligibilityto be completed in full and, the property in a ship is divided into 64 shares
  • A UK representative must be appointed if none of the owners making up the majority interest resides in the UK
  • Certificate of Incorporationif the registering owner is a registered company

 

There is no requirement to submit any KYC documents to support the change of ownership.

The overall procedure for the change of ownership can be completed in 7-10 working days or 1-3 working days maximum if the owner chooses premium processing.

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Benefits in using corporate structures for yacht ownership / Determining factors in choosing jurisdiction

It can be reasonably argued that apart from the decision on what type of yacht to buy, a yacht owner has one other very important decision to make; which flag to have her registered under. Choosing a flag is not an easy task as many considerations need to made i.e. the flag requirements, annual taxes, reputation of flag etc. What is extremely important at the end of the day is the ownership structure of the yacht, meaning whether the yacht will be registered directly in the name of the physical person -yacht owner or in the name of a new corporate entity which is formed for such purpose. In fact nowadays the trend seems to be for the yacht to be owned by a corporation, for various reasons.

 

One of the main and most common reasons for using a corporate entity as owner of a yacht is privacy.   Reasonably, many yacht owners want to keep their ownership confidential without having their name appearing on any public official document. This can be avoided by registering the yacht in the name of a corporate entity where in fact the yacht is being used privately by the principal of the said entity. In this way, the anonymity and privacy of the beneficial owner is maintained.

 

In addition, a primary motive for the creation of a corporate structure is the fundamental legal principle of the corporate world: limited liability. By forming a limited liability company the yacht owner can minimize their personal liability and protect their personal assets by keeping them untouched and safe. What is meant by that is that the risk to the shareholders is limited to the assets of the corporation, ie the value of the yacht. If the corporation’s liabilities due to any claims against the yacht itself exceed the assets of the corporation, the corporation would simply be dissolved without having the personal assets of the shareholders taken to satisfy the claim. If the yacht was instead owned directly by an individual owner, any uninsured loss caused by the yacht would become a personal liability of the owner, having their entire net worth exposed to such claims.

 

Another important factor to be taken into consideration in deciding to form a new entity to hold the yacht is the ease of disposition of the yacht. The sale of the yacht might become easier by transferring the shares from the holding company to the buyer, especially if maintaining the existing flag. Instead of selling the yacht to another party, the company itself is sold, with the yacht being the sole asset of such company. Often such sale may be exempted from sales taxes.

 

In addition, the qualification for a flag is a determining consideration in yacht registration and ownership. As a matter of fact all the flags have different ownership requirements and consequently many individual owners may not be allowed to have their yachts directly registered in their name in the flag of their choice. This difficulty is avoided through the incorporation of a corporation of a jurisdiction which qualifies for a flag which would otherwise not be available to the individual owner.

 

Last but not least, the intended area of cruising, which often relates to the tax consequences, is also a determining factor for the ownership structure of the yacht. Anyone who intends to use a private yacht within EU waters must be aware of the VAT consequences since all private yachts owned or used by EU residents (including EU corporations/entities) must be have their VAT paid in order for the boat to be used in EU territorial waters. On the other hand, any private yacht which is owned and used by a non –EU resident (under a non EU flag etc) may be allowed to enter EU waters for up to 18 months on a Temporary Import basis free of VAT implications.

 

 

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New Red Ensign Group Yacht Code

A new regulatory framework for yachts namely the Red Ensign Group Yacht Code (hereinafter referred to as “the REG Code”) was launched on the 13th November 2017 at the Global Superyacht Forum in Amsterdam.

The new REG Code is the result of a lot of work, lengthy discussions and cooperation between the members of the Red Ensign Group and the industry as a whole. Sir Alan Massey, CEO of the Maritime & Coastguard Agency, described the Code as “an excellent example of how well the Red Ensign Group works both together as a team and also with the wider industry to make sure we continue to be that. We maintain the highest maritime safety standards but also recognise that we must take into account a changing industry.”

The REG Code consists of two parts with common annexes such as for over-side working systems, sailing vessels and helicopter landing areas, enabling builders and designers to continue to recognise the familiar formats of the existing REG codes. It will consolidate an updated version of the Large Yacht Code (LY3) and the latest version of the Passenger Yacht Code (PYC) to address the needs of the large yacht industry. Specifically, an updated version of LY3 in ‘Part A’ will continue to be applied to yachts that are 24 meters and over in load line length, in commercial use, for sport or pleasure and which do not carry cargo or more than 12 passengers. ‘Part B’ will consist of the latest version of the PYC applicable to pleasure yachts of any size, in private use or engaged in trade, which carry more than 12 but not more than 36 passengers and do not carry cargo.

As per Jo Assael, senior surveyor and yacht code specialist for the Cayman Islands Shipping Registry, ‘although the codes remain mostly the same, we want to make sure that within this prescriptive framework, we have equivalent arrangement clauses. These support innovation and point to alternative SOLAS design routes as an alternative which would be just as safe as the prescriptive one.’

Highlighted in the REG Code are the necessary steps required to adapt to the International Maritime Organisation’s new four year adoption and amendment cycle for its Conventions (SOLAS, Load Line & STCW), to which the Codes form equivalences. This with the hope of making the Large Yacht Code more dynamic to industry change and development, while slowing the annual PYC editions to continue to meet the new international requirements for passenger ships.

The new Code will come into force on the 1st of January 2019 in order to give the industry sufficient time to become familiar with its provisions. The Cayman Islands Shipping Registry will take the lead in the secretariat function of the code, on behalf of the REG.

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Cyprus Ship Registry:New Regulations for Pleasure Yachts under 24m

The Department of Merchant Shipping (the “DMS”) is currently in the process of drafting new Law and Regulations with regards to pleasure yachts below 24m. This is noteworthy since the current Law has been in force for 25 years, since 1992, whereas the Regulations have been in place for 18 years, since 1995.

As mentioned, the new Legal framework will apply to all pleasure yachts below 24m.

The drafts of the new Law and Regulations are expected to come before the Parliament for approval in November and will contain significant changes to the current legal framework. The proposals made by the DMS and the drafting of the new Law and relevant Regulations will follow extensive consultation with society, members and affected parties (such as owners, associations, professionals, engineers, importers) and the competent authorities/associations.

The new Regulations are said to contain provisions for marine casualties and will apply to sailing yachts for the first time. There will also be changes as to the possible penalties imposed. An important amendment is also the requirement for candidate captains of the yachts to be trained under a specific training program.

The new Regulations will replace the existing pleasure yacht Regulations, and are said to fill in any existing gaps in the law.

We shall keep you updated as to any progress.

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Maritime Cyprus 2017

The “Maritime Cyprus 2017” Conference to be held in Limassol, Cyprus, between the 8th‑11th of October 2017, is a biennial international shipping conference, organised by the Ministry of Communications and Works and the Department of Merchant Shipping in cooperation with the Cyprus Shipping Chamber and the Cyprus Union of Shipowners.

The event is internationally recognised and gathers attendees from all over the world who range from shipping executives, owners, managers, to bankers, lawyers, accountants and delegates from other shipping organisations.

The Maritime Cyprus Conference was originally held in 1989 and hence this is the 15th such Conference being held. The aim of the Conference is to operate as a forum where current issues of fundamental importance in the industry and forthcoming changes are discussed. The main theme for the 2017 Maritime Conference is Shipping: Yesterday’s World, Tomorrow’s Today.

The conference will be officially opened by the President of the Republic of Cyprus, Mr. Nicos Anastasiades. Distinguished guests such as, the Secretary-General of the International Maritime Organization, the Commissioner in charge of Transport of the European Commission and other personalities of the International Shipping scene will address the conference.

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Yacht Registration Centre, Y.R.C

15 Agiou Pavlou
Nicosia - 1105
Cyprus

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