Ship Shape - Boat Registration

BY VAREEN VANTERPOOL-NIBBS

THE GOVERNMENT OF the Virgin Islands has recently introduced new measures to support the continuing growth of ship registrations in the BVI and the Virgin Islands Shipping Registry (VISR). The Merchant Shipping (Amendment) Act, 2018 (the Act) was passed by the House of Assembly in December 2018 and is expected to come into force this year and by the date of publication of this article.

Under Section 4 of the Merchant Shipping Act, 2001, VISR is only capable of registering ships owned by certain prescribed categories of persons (Eligible Persons). The Act has expanded the categories of Eligible Persons to now include nationals and corporate entities of a Member State of the Caribbean Community or the Organisation of Eastern Caribbean States; and persons who are citizens, corporate entities or foreign companies which are incorporated, established or registered in a recognised jurisdiction or any overseas country, territory or dependency of a recognised jurisdiction. For purposes of the Act, a recognised jurisdiction is one that is included in Schedule 2 to the Anti-Money Laundering and Terrorist Financing Code of Practice, 2008.

Prior to the Act, the categories of Eligible Persons who could register a ship in the BVI were only citizens of the BVI, the United Kingdom, British Dependent Territories and British subjects, British nationals under the Hong Kong (British Nationality) Order 1986, and nationals of Member States of the European Union or European Economic Area, including the overseas territories of these Member States. Also, ships belonging to corporate entities of any Member State of the European Union or European Economic Area, including the United Kingdom, and having its place of business in such Member

State; corporate entities incorporated in the Isle of Man, the Channel Islands and any British colony other than the BVI or in any overseas territory of a Member State of the European Union or the European Economic Area and having a place of business in such British Possession or overseas territory; and corporate entities incorporated in the BVI or any Member State of the Caribbean Community or the Organisation of the Eastern Caribbean States and registered in the BVI, comprised the list of Eligible Persons.

With this newly introduced provision, VISR can now provide registration services to a significantly wider customer base including nationals and corporate entities of neighbouring Caribbean countries and the United States of America. Prior to the introduction of the Act, a company incorporated in a Member State of the Caribbean Community or the Organisation of Eastern Caribbean States had to be re-registered as a foreign company in the BVI under Part X of the BVI Business Companies Act, to become a Qualifying Person. The re-registration in the BVI as a foreign company meant that the company also incurred additional administrative and other costs in order to qualify to have a ship registered in the BVI. However, this challenging requirement of such companies having to be so re-registered has been removed.

The registration of bareboat charter ships in the BVI is no longer based

on tonnage, as VISR is now fully capable of registering a ship of any gross tonnage that is operating under a bareboat charter. The Act removed the previous restriction that only bareboat charter ships of 1500 gross tonnage and above could be registered in the BVI. Accordingly, once all other statutory requirements are met, any bareboat charter ship, regardless of its gross tonnage will be capable of being registered by VISR. The removal of the previous restriction regarding a ship’s gross tonnage in addition to the widened category of who may own a Virgin Islands ship is expected to have a significant positive impact on ship registration business in the BVI.

Along with the registration of any bareboat charter ship, the Director of Shipping will also be able to issue dispensations to bareboat charter ships of any gross tonnage, provided that all other statutory provisions are met.

The Director of Shipping will continue to only grant a dispensation however, if he or she is satisfied that (a) the ship is subject to a charter, for the period of which the registered owner is not responsible for the management, operation and control of the ship (b) where there is a registered mortgagee, such registered mortgagee has consented to the dispensation being granted (c) in addition to the registration of the ship in the BVI, the ship is intended to be registered under the laws of another country outside of the BVI, and (d) the ship will become subject to laws of that other country which implement and apply to it such provisions of the Collision Convention, the International Labour Convention, the Load Line Convention, the Marine Pollution Convention, the Safety Convention and the Convention on Standards of Training, Certification and Watchkeeping for Seafarer, 1978 (STCW Convention), to the same extent that these convention provisions apply to a BVI registered ship.

The BVI has taken another encouraging step towards provisioning for the registration of ships that are under construction. The recent amendment formally includes the registration of ships under construction as a distinct subject matter in respect of which the Government may make statutory rules and regulations going forward. The registration of ships under construction is a settled issue in the shipping laws of several competitor jurisdictions outside the BVI. VISR continues to demonstrate that it is keen to see the introduction of registration of ships under construction into the BVI’s shipping legal framework, which too would further increase the attractiveness of the BVI as a home for ship registrations.

Harneys Private Client team regularly advises clients on the acquisition of ships including devising ownership structures for eligible persons to satisfy the tax, regulatory, succession planning and other needs of each client. For more information on these solutions or any other matters relating to ship registration, registering a business, or planning for future generations, please contact Sheila George, Johann Henry or Vareen Vanterpool-Nibbs. ■