Bahamas: Advantages Of Registering A Vessel Under The Bahamian Flag

Last Updated: 24 August 2012
Article by Vivienne M. Gouthro

The Bahamas ship register is the flag of choice for many top quality ship owners. It is one of the world's largest Registers with over 50 million gross tons of ships flying the Bahamas Flag.

The Bahamas Maritime Authority ( the "BMA") was established on the 1st July, 1995 and is a semi-autonomous, government-owned corporation which focuses on maintaining the highest reputation of the Bahamian fleet and that high standards are maintained on Bahamian flag vessels as well as a clean maritime environment. Its function is to register vessels, enforce ship safety requirements and monitor and improve standards. The BMA has offices located in Nassau, Bahamas, New York, London and Hong Kong from which it can advise and assist ship owners and their representatives.

The Bahamas Shipowners Association (The "BSA") which was inaugurated on 11th July 1997 to promote the interests of shipowners of Bahamian registered vessels provides an effective conduit through which ship owners may voice their opinions and concerns and also facilitates dialogue between shipowners and the BMA. Together the BMA and BSA, based on their tonnage and independence as well as and their large representation of ship owners world wide have a powerful voice in the shipping world.

The Merchant Shipping Act 1976 (Chapter 268, Statute laws of The Bahamas (2000 edition))(the "Act") provides a comprehensive scheme for the registration of vessels under the Bahamas flag and is aimed at encouraging the use of The Bahamas Registry by foreign ship owners.

Advantages

Some of the main advantages of registering a vessel under the Bahamian flag are set out below:-

  • Its reputation of quality and excellence. The BMA welcomes all types of vessels to register whilst ensuring that the highest international standards are met.
  • It has a young fleet. The registration of older vessels is actively discouraged and ships over 12 years old are only admitted if they meet exceptional criteria.
  • It has offices around the world enabling the BMA to provide continuous support and assistance to shipowners, their agents and crew.
  • Availability of Nautical Inspectors. The BMA has approved a world wide network of nautical inspectors to undertake safety and crew condition inspections on board Bahamian vessels and are available to assist ship owners, wherever their vessels may be.
  • Foreigners can hold direct title to a Bahamian vessel. As long as a vessel is engaged in "foreign going trade" i.e. engaged in trade that is not exclusively within The Islands of The Bahamas or between The Bahamas and the East Coast of Florida, a foreign owner, irrespective of nationality or place of incorporation, can hold title to a Bahamian flag vessel either directly or through a corporate entity. Furthermore any vessel of 1600 or more net tonnage regardless of the nationality of her owners may also be registered as a home trade ship with the express permission of the Minister responsible for Maritime Affairs.
  • Tax Exemptions. The Bahamas does not impose any tax on income, capital gains or similar financial revenues. Therefore, the operation or income of a Bahamian- registered vessel or any capital gain on her sale is tax-free in The Bahamas. Foreign owned vessels of more than 150 GRT are also exempt from Bahamas custom duties and documentary stamp taxes, whether they call at local ports or not. In addition, all instruments used for carrying into effect Part II of the Act, such as the prescribed forms required for the registration of vessels and mortgages of Bahamian vessels, are exempt from stamp duty.
  • Competitive fees. The Bahamas offers competitive registration and annual fees for vessels engaged in commercial foreign trade . The fees below were in effect as at 1 July, 2011. Effective 1 July, 2011 no registration fees are applicable to vessels joining the Register:

  • Crewing flexibility. Foreign officers and crew members may serve on Bahamian vessels provided the officers hold foreign professional certification acceptable to the BMA and a licence has been issued to them by the BMA. Upon production of the officers' Certificate of Competency granted by a competent recognised foreign authority and upon payment of a prescribed fee, a Bahamian licence of qualification will be issued to the officers.
  • Dual Registration. Where The Bahamas is the primary country of registration, bareboat or dual registry is allowed between the owner of a Bahamian vessel and a secondary country that allows for dual registry. Therefore, vessels may operate under another flag in accordance with the bareboat charter requirements whilst maintaining registration under the Bahamian flag. The Bahamian registration will be deemed suspended for the duration of the bareboat or dual registration, although mortgages may continue to be recorded on the Bahamas Register, for the period of the charter.

Reciprocally, vessels may also be bareboat chartered into The Bahamas Register thus enjoying the privileges of a Bahamian ship, if the following criteria are met:-

  1. the laws of the primary country allow it; and
  2. a bareboat charter is entered into with a body corporate in The Bahamas.

However it should be noted that when a vessel is operating as a Bahamian ship under a bareboat charter, it cannot record mortgages in the Bahamas Ship Register. Mortgages can only be recorded in the original primary ship register.

  • Simple process for the registration of Mortgages. The Act provides a simple, inexpensive and expedient procedure for the registration and discharge of mortgages. The Registrar may record a mortgage or discharge of mortgage in respect of a vessel in the Register of Bahamian Ships as soon as the vessel is provisionally registered, upon production of the prescribed statutory form, duly executed and notarized. Brief details of the mortgage are entered in the register and a transcript of register can be issued evidencing the date and time of the registration of the mortgage as well as the name of the Owner and details of the Vessel, upon the payment of a prescribed fee. Mortgages are recorded in the order of date and time in which they are produced to the Registrar. Where more than one mortgage is recorded on a vessel, the order of priority between mortgages is the order in time of recording and not the order of the date of the mortgages.

Registration Requirements.

Foreign-owned vessels may be registered in The Bahamas if they are less that 12 years old, at least 1,600 net registered tons (NRT) and engaged in foreign trade. If a ship is more than 12 years old and is under 1,600 NRT, special permission has to be obtained from the Minister responsible for Maritime Affairs for the ship to be registered on the Bahamas Register. Permission may be granted subject to a satisfactory inspection conducted by an authorized Bahamas inspector at the discretion of the Minister.

To start the registration process, the ship owner must complete and submit to the BMA, form R102 (Application to Register) providing the names and general details of the ship along with form R104 (Registration of Managing Owner) which provides the contact details of the managers responsible for the management of the ship, along with copies of the ship's current class certificates. Once the application is reviewed and the Registrar has confirmed that the vessel can be provisionally registered, the Registrar will reserve the name for the ship and issue Bahamas identification details such as the official number, call sign and MMSI number. The remaining registration forms (which can be downloaded from the BMA's website at www.bahamasmaritime.com) and required documents can then be submitted to the BMA. Vessels can be provisionally registered for six months to allow owners to complete and fulfill the permanent registration requirements. A certificate of Permanent Registration will be issued once all requirements are met.

Below are a list of application forms that are required to be forwarded to the BMA to complete the registration of a ship:

  • Authorised Officer Declaration.
  • Declaration of Ownership
  • Application for Safe Manning Certificate
  • Application for Permit to Operate a High Speed Craft ( if applicable)
  • PUC Radio Licence Application and MMSI Application.
  • Application for a Continuous Synopsis Record (CSR)

Below are the list of certificates required to complete the registration of a ship:

  • Bill of Sale or Builder's certificate (if a new ship)
  • Copy of the Certificate of Incorporation of the Owner and original Certificate of Good Standing.
  • Former Survey Certificate and/or copy of the Certificate of Registry
  • Former International Tonnage Certificate
  • Former Load Line Certificate
  • ISM Document of Compliance
  • ISM Safety Manaagement Certificate
  • International Ship Secuirty Certificate
  • Oil Pollution Certificate (CLC) (Tankers only)
  • Former other statutory certificates issued under International Conventions and Codes, including exemption certificates
  • Former Caribbean Cargo Ship Safety Certificates (if applicable)
  • Release from Foreign Register
  • Declaration of No Liens on Foreign Register.

Vivienne Gouthro, partner responsible for the Freeport office, is chair of the firm's Maritime/Shipping & Aviation practice group. She specialises in ship and international finance involving Bahamian ships and companies, acting primarily for financial institutions and providing legal opinions on complex international finance matters and commercial acquisitions and sales.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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