vessels

VESSELS REGISTRATIONS IN PANAMA

To enjoy protection under international law, a vessel must possess a
national character. Generally, maritime nations restrict ship
registration to their nationals or nationally registered entities. The
Republic of Panama offers a sovereign open ship register, allowing
foreign individuals or corporations to enjoy the same privileges as
Panamanian nationals.

According to Lloyd’s statistics (June 1999), Panama has increased its
lead as the world’s largest shipping register: during 1998, Panama’s
merchant fleet grew by almost 8% to 98.2 million gross tonnage.
This represents over 18.5% of the total world merchant
fleet.

Panama is, since 1958, a member state of the International Maritime
Organization (IMO), the United Nations specialized agency
responsible for improving maritime safety and preventing pollution
from ships.

Panama is the largest contributor to the IMO’s budget:15.80%, as
compared to 5.23% for Japan and 4.12% for the United States
(2000/2001 appropriations) and has the honor to occupy a seat on the
IMO’s Council, the executive organ of this prestigious organization,
in the A Category (reserved to the ten states with the largest
interest in providing international shipping services) in the company
of the USA, China, Greece, Italy, Japan, Norway, Korea, the Russian
Federation and the United Kingdom.

Shipowner Eligibility

Any individual or corporate entity, irrespective of nationality or
country of incorporation, may register a vessel under Panamanian
flag.

Vessel Eligibility

There is no minimum tonnage and almost any category of ships can
be registered, from passenger ships to dredges and floating docks.
There are no age restrictions; however vessels older than 20 years
are subject to a special inspection. They will be issued a Provisional
Patente and will have 6 months to complete the inspection.

Taxation Issues

Panamanian vessels are subject to the payment of a moderate annual
fee calculated on the basis of their tonnage.

On the other hand, nonresident shipping companies are not subject
to income or withholding taxes since the fiscal legislation in Panama
taxes only the income that arises or derives from activities within
the national territory.

Fleet Discounts

When registering three or more vessels, with a combined gross
tonnage of 50,000 to 100,000 GRT, a shipowner may qualify for a
discount in registration fees of 20% (up to 50% if the tonnage
exceeds 100,000 GRT. Additionally, fleets whose combined tonnage is
over 100,000 GRT may receive a discount of 50% of the annual
tonnage tax.

Those requests are assessed, prior to registration, by the Shipping
Department of the Maritime Authority, which will evaluate them on
the basis of the type of vessel, the year of construction and the
shipowner’s background with the Panamanian Registry.

Technical Certificates

Shipowners who wish to transfer their vessels to the Panamanian
registry are not required to have the vessels re-surveyed, provided
the vessels possess valid safety certificates. Furthermore, provisions
are made to accept foreign tonnage certificates at the moment of
registration; this obviates the necessity to have the ship dry docked
prior to the registration and consequently saves the shipowners
considerable expenses.

General Considerations

When it comes to selecting a flag, the decision should not be taken
lightly. Your fleet shall be proud to hoist a flag recognized and
respected the world over; the flag of the country who is
administering single-handedly the Canal of Panama and the yearly
transit of 14,000 ships.

Panama is much more than a canal! Geographically situated at the
crossroads of the world, and strong of its experience as the largest
and one of the oldest registries, Panama offers a complete business
infrastructure including:

The Colon Free Zone (the second largest in the world, after Hong
Kong);
The most modern and successful international banking center in
Latin America, comprising over 126 banks from 35 countries,
regulated by the Basle Convention

An economy based on the US Dollar, with that currency circulating
freely and exclusively as Legal Tender.

The most secure confidentiality laws to be found anywhere, as
exemplified by the reputation of Panamanian offshore corporations

And above all, the reliability of the Panamanian People, highly
skilled, mostly bilingual, and eager to welcome you with all their
wonderful country has to offer!

Vessel Registration

The enrollment consists of two stages: provisional and permanent.
The Consulate will handle the initial paperwork and is authorized to
issue temporary documentation including a provisional Certificate of
Registration (also known as “Patente”), valid for 6 months and a
provisional Radio License, valid for 3 months. The procedure is
straightforward and is usually completed within the same day, as
soon as registration fees and first year's annual charges are paid to
the Panamanian Government.

The shipowner must appoint a Panamanian law firm to act as its
representative in Panama. That firm will file the title of ownership
with the Public Registry Office, in Panama, and submit an
application for permanent registration to the Shipping Department
within the validity period of the temporary certificates.

Bareboat Charter Registration (Dual Registry)

Under bareboat charter, a shipowner leases a ship to an operator –
the charterer – which becomes responsible for the operation of the
vessel. According to Panamanian Law, which allows Dual Registry,
that vessel, already registered in one state, may be registered under
the flag of another state for the duration of the charter (up to two
years, renewable).

The dual registry system allows a charterer, leasing a ship registered
in a country without an open registry, to benefit from the advantages
of the Panamanian Registry. It also allows the shipowner to maintain
the original registration, which is merely suspended during the dual
registration but regains its effectiveness upon termination of the
charter. The authorization of the original flagging state, as well as
the shipowner's, is necessary.

Name Registration

It is possible to reserve in advance the name of a vessel in
construction, or scheduled for construction, provided this name is
available, upon payment of a nominal fee of US$40.00 per month.

Special Provisional Registration

Vessels of international service destined for scrap, delivery voyages
or any other mode of temporary navigation may apply for a
provisional Patente and a Radio Permit both of which are valid for
three months.
Supporting Documents

After the preliminary data about the vessel and the parties is
collected (application form), the following original documents must
be filed with the Consulate at the time of registration.

          Please note that all documents must be notarized. The
notary's signature must, in turn, be authenticated and this process
can take different forms: Panamanian Consulates all over the world
are able to legalize documents signed within their jurisdiction. In the
U.S., the local Department of State will confirm the authenticity of a
notary's signature. Most countries will provide a similar
acknowledgement known as an 'apostille'.

  Power of Attorney: the Shipowner must appoint a practicing
Panamanian lawyer as legal representative of the vessel.

Corporate Resolution: If a corporation submits the registration
application, the authority of its representative must be clearly
established.

Deletion or Cancellation Certificate: (Does not apply to new
vessels). Issued by the authority of the former country of
registration, this document indicates that the vessel is no longer
registered under their flag and that it is free from mortgages or
encumbrances.

Title of Ownership (two copies): Bill of Sale, or Builder’s Certificate
in the case of a new vessel.

Acceptance of Sale: the buyer must state his approval of the sale
transaction.

International Tonnage Certificate, or Certificate of
Admeasurement. Certified by the surveying company, does not need
to be notarized.

Inspections & Surveys

All vessels must pass an annual inspection to ensure that they meet
with international safety regulations, carry up to date certificates
and are properly manned and equipped for their intended trade. To
prevent the enrollment of potentially hazardous ships, vessels built
over twenty years ago must be inspected before a permanent Patente
can be issued. These inspections are monitored by the Directorate of
Consular and Maritime Affairs (SECNAVES) of the Ministry of
Finance and Treasury, whose representative is SEGUMAR (New
York).
All vessels are subject to surveys by an approved classification
society that will issue tonnage and other technical certificates.
Depending on the type of vessel, those certificates may include:

- Passenger Ship Safety Certificate
- Cargo Ship Safety Construction Certificate
- Cargo Ship Safety Equipment Certificate
- Cargo Ship Safety Radiotelegraphy Certificate
- Cargo Ship Safety Radiotelephony Certificate
- Exemption Certificate
- International Load Line Certificate
- Grain Loading Certificate