PANAMA COMPANY & SHIP REGISTRATION TOOLS TO COMPETE IN THE - PowerPoint PPT Presentation

PANAMA COMPANY & SHIP REGISTRATION – TOOLS TO COMPETE IN THE INTERNATIONAL ARENA CARCOSA NEGI SEGARA, KUALA LUMPUR, MALAYSIA 9 October 2012 Tomás M. Ávila M. Senior Partner, Ávila & Co., Panama tomas@avilaco.com - www.avilaco.com TOOLS TO COMPETE IN THE INTERNATIONAL ARENA 1

SHIP REGISTRATION TOOLS TO COMPETE IN THE 2 INTERNATIONAL ARENA

 What is an Open Ship Registry, as opposed to a Closed Registry  Advantages of the Panama Ship Registry  The Panama Registry as viewed from the IMO Regulatory Process  World Fleet Statistics as at 1 August 2012  Key Elements of the General Merchant Marine Law (Law No. 57 of 6 August, 2008  Updates and Innovations TOOLS TO COMPETE IN THE 3 INTERNATIONAL ARENA

What is a Open Ship Registry as opposed to Closed Registry The term “Open Ship Registry” 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. A “Closed Registry” is one that only allows the registration of vessels owned by nationals of their country and of those vessels which will operate within their jurisdictional waters or carrying products elaborated in such country. This concept has been used since the 1950’s and is related to the flag that the ship would fly in order to show their country of registration, thus showing the laws under which the ship is required to operate and to be applied in relevant admiralty cases. Open Registries must comply with all of the international regulations. TOOLS TO COMPETE IN THE 4 INTERNATIONAL ARENA

Today more than half of the world’s merchant ships, measured by tonnage, are registered under the Open Ship Registries. Traditional reasons for choosing an open register includes benefits from income taxes and flexibility on the crew, among others. Supporters of open registries state that where a vessel is engaged in international trade it should be free to register in the jurisdiction which best suits its commercial model. TOOLS TO COMPETE IN THE 5 INTERNATIONAL ARENA

TOOLS TO COMPETE IN THE 6 INTERNATIONAL ARENA

Advantages of the Panama Ship Registry 1. Established in 1925 2. The owner and seafarers may be of any nationality 3. Broad Definition of Vessel 4. No minimum tonnage 5. No re-inspections for vessels changing register if vessel holds ISM and ISPS certificates issued by an authorized Recognized Organization 6. SEGUMAR Technical Office 24/7 in 7 different countries 7. Involvement of the National Government – 60 Panama Consulates World Wide that operation as Merchant Marine Documentation Offices 8. Rapid registration of enrollment 9. Special Charter Registry 10. Ship Financing friendly – Preliminary Registration of Title and Mortgage 11. Tax Incentives 12. Major Class Survey Societies Accepted TOOLS TO COMPETE IN THE 7 INTERNATIONAL ARENA

The Panama Registry as viewed from the IMO Regulatory Processes IMO Voluntary Audit Panama for the first time in December 2008 was voluntarily audited by the International Mariitime Organization. As you know IMO is the major maritime international institution which promotes the cooperation between states and the industry to improve maritime safety and pollution of the seas. ISO 9001:2000 Certification On October 2008, the General Directorate of Merchant Marine was Certified with the ISO 9001:2000 by Lloyd’s Register Quality Assurance. PMA is one the few Government entities with a certified quaility system. TOOLS TO COMPETE IN THE 8 INTERNATIONAL ARENA

World Fleet Statistics, as at 1 August 2012 Flag Type Age No. Vessels M. GT Panama Open 16.9 8,716 226.1 Liberia Open 9.6 3,164 128.4 Marshall Is. Open 7.9 2,024 81.1 Hong Kong Open 9.1 2,813 76.5 Singapore Open 9.2 3,375 56.3 Bahamas Open 14.3 1,469 54.2 China PR National 21 4,236 44.1 Greece National 23.6 1,584 43.2 Malta Open 12.4 1,823 42.7 Cyprus Open 11.4 1,047 20.4 Information Extracted from Clarksons Research Services Limited, World Fleet Monitor, Volume 3, No. 8, August 2012 TOOLS TO COMPETE IN THE 9 INTERNATIONAL ARENA

Key Elements of the General Merchant Marine Law (Law No. 57 of 6 August, 2008) 1. Discounts of up to 60% for newly built vessels 2. Discount for vessels registered during the first five years of construction 3. Discounts for MODU 4. Loyalty Discounts 5. Lay-up Registry 6. Charter in – Charter Out 7. Special Delivery Voyages Registratiion TOOLS TO COMPETE IN THE 10 INTERNATIONAL ARENA

MORTGAGE REGISTRATION TOOLS TO COMPETE IN THE 11 INTERNATIONAL ARENA

 Brief Review of the Mortgage, as generally understood  Formal Requirements  Mortgage of a Vessel under Construction  Enforceability  General discussion on FAQ received at our firm  Can a Panama Ship Mortgage be novated  Can a Panama Ship Mortgage secure more than one obligation  Is a Panama Ship Mortgage valid even if the owner has yet to receive legal title of a vessel  Is the Panama Ship Mortgage a unilateral act or an agreement by both parties.  Alternatives to the registration of the usual 40-page mortgage instrument – How to save a few bucks and make the Borrower happy while keeping the Lenders’ interest secured. TOOLS TO COMPETE IN THE INTERNATIONAL ARENA 12

BRIEF REVIEW OF THE MORTGAGE, AS GENERALLY UNDERSTOOD TOOLS TO COMPETE IN THE 13 INTERNATIONAL ARENA

FORMAL REQUIREMENTS ARTICLE 260. THE SHIP MORTGAGE AGREEMENT MAY BE EXECUTED WITHIN OR OUTSIDE OF THE REPUBLIC PANAMA, IN ANY LANGUAGE, IN WRITING, BY PUBLIC DEED OR PRIVATE DOCUMENT. IF EXECUTED AS A PRIVATE DOCUMENT, THE SIGNATURE OF THE PARTIES MUST BE AUTHENTICATED BY A PUBLIC NOTARY OR BY A CONSUL OF THE REPUBLIC OF PANAMA, IN THE EXERCISE OF HIS NOTARIAL POWERS. IN ADDITION, THE SHIP MORTGAGE AGREEMENT MAY BE EXECUTED IN ACCORDANCE WITH THE FORMALITIES OF THE COUNTRY IN WHICH IT IS EXECUTED. IN ANY EVENT, THE MORTGAGE AGREEMENT MUST BE LEGALIZED WITH AN APOSTILLE OR BY A CONSUL OF THE REPUBLIC OF PANAMA PRIOR TO BEING SUBMITTED TO THE PUBLIC REGISTRY. TOOLS TO COMPETE IN THE 14 INTERNATIONAL ARENA

The mortgage deed may contain all provisions that the parties deem advisable, however must contain, in every case: Article 260, Law No. 55 of 6 August 2008 TOOLS TO COMPETE IN THE 15 INTERNATIONAL ARENA

1. The name and domicile of the mortgagor and of the mortgagee. TOOLS TO COMPETE IN THE 16 INTERNATIONAL ARENA

2. The fixed or maximum principal amount secured or of the obligations secured. The mortgage shall also secure, in addition to the principal or obligations secured, all earned interest, court costs, collection expenses, amounts due as a result of fluctuations in currencies or payment methods, and any other sums agreed upon in the mortgage agreement. It is presumed that, as between the parties and in respect of third parties, unless proved otherwise, any sums owed whether it be principal, interest or any other sums secured by the mortgage, shall be the amounts mentioned in the writ of complaint. ON OPEN MORTGAGES: If the mortgage secures a debt whose existence or amount cannot be ascertained at the time of the execution of the mortgage agreement, if the essential particulars which allow the obligation to be identified and the maximum secured amount are included, this shall be deemed sufficient. TOOLS TO COMPETE IN THE 17 INTERNATIONAL ARENA

3. The date of payment of the principal or of the performance of the secured obligations and interest, or the method for determining such dates, unless the mortgage secures obligations payable on demand, future obligations or obligations subject to conditions precedent. 4. If interest has been agreed on, the mortgage agreement must include the interest rate agreed upon, or the method in which it may de determined. Interest may be provided by reference, among other things, to the rate prevailing in a given market, or as the rate provided by banks to certain borrowers in any market or at the rate of the cost of funds. The rate adopted may be the rate prevailing at the time that the agreement is signed or in accordance with the fluctuations occurring during the term of the loan. Loans secured by a mortgage shall not be subject to a maximum interest rate, and therefore shall not be subject to legal provisions restricting these. Nevertheless, the Superintendent of Banks may prescribe a maximum interest rate for these loans if the vessel secured by a mortgage lien is engaged in domestic trade. TOOLS TO COMPETE IN THE 18 INTERNATIONAL ARENA

5. The name, registration number and call sign, if any, and the registered tonnage and measurements. The provisions of Article 263 shall be applicable if the mortgaged vessel is a newbuilding. 6. If several vessels are mortgaged to secure one loan, the amount or share of the lien secured by each party may be stipulated. If such stipulation is not made, the mortgagee may claim against any or all of the vessels for the total amount secured. The provisions referred to in paragraphs 3 and 4 of this Article may be included in the mortgage agreement or in extracts, contracts, or schedules attached to and to be registered with the mortgage agreement. If the mortgage secures a debt whose existence or amount cannot be ascertained at the time of the execution of the mortgage agreement, if the essential particulars which allow the obligation to be identified and the maximum secured amount are included, this shall be deemed sufficient. TOOLS TO COMPETE IN THE 19 INTERNATIONAL ARENA