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Guide to the Shipping Register in Hong Kong Introduction: the Administration of Hong Kong With the resumption of the exercise of sovereignty over Hong Kong in 1997, China implemented the principle of ʹone country, two systemsʹ and fulfilled the promises of ʹa high degree of autonomyʹ and ʹHong Kong people administering Hong Kongʹ. The Basic Law (the mini‑constitution for the Hong Kong Special Administrative Region) established at that time, delineates the rights and obligations of the residents of Hong Kong and clearly prescribes social, economic and political systems which are different from those of Mainland China. Today, Hong Kong is one of the freest and most vibrant economies in the world. Factors such as free enterprise and free trade; prudent financial management and low taxation; the rule of law; an executive‑led government; and an efficient civil service have all contributed to Hong Kongʹs success, and have all been guaranteed in the Basic Law. Given Hong Kong’s thriving port and its prominent position in a crowded global market, a number of measures have been implemented since 1 April 1999 to make the Hong Kong Shipping Register (the “Register”) even more competitive, user friendly and efficient. These measures aim to further improve the Registerʹs quality at a reduced cost. They include the reduction of fees and the streamlining of procedures for ship registration, seafarersʹ licensing and employment and discharge of seafarers. In addition, a flag‑state quality control (FSQC) system has been introduced to ensure safety standards and compliance with international conventions by all Hong Kong registered ships in a cost‑effective manner. This briefing provides an overview of key elements of the Hong Kong Shipping Register.

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Hong Kong: MaritimeBriefing July 2014

Contents Introduction: the Administration of Hong Kong

The Hong Kong Shipping Register 02Schedule 07Contacts 09

02 03 HONG KONG: MARITIME HONG KONG: MARITIME

The Hong Kong Shipping Register The Hong Kong Government appointed a Steering Committee in 1987 to advise the Government on the establishment of an independent shipping registry. The result was the Merchant Shipping (Registration) Ordinance (Cap 415) (the “Ordinance”), which came into effect on 3 December 1990. Until then, the United Kingdom Merchant Shipping Acts (the “Acts”) (except for the Merchant Shipping Act 1988) applied to registration of ships and to mortgages of ships in Hong Kong. A ship registered at the Port of Hong Kong was, therefore, a British ship. On 1 July 1997, Hong Kong reverted to Chinese sovereignty and became a Special Administrative Region of the People’s Republic of China. Section VIII of Annex I to the Sino‑British Joint Declaration of the transfer of sovereignty addresses the impact on the maritime industry, stating that: “The Hong Kong Special Administrative Region shall maintain Hong Kong’s previous systems of shipping management and shipping regulation, including the system for regulating conditions of seamen. The specific functions and responsibilities of the Hong Kong Special Administrative Region Government in the field of shipping shall be defined by the Hong Kong Special Administrative Region Government on its own. Private shipping businesses and shipping‑related businesses and private container terminals in Hong Kong may continue to operate freely. The Hong Kong Special Administrative Region shall be authorised by the Central People’s Government to continue to maintain a shipping register and issue related certificates under its own legislation in the name of ‘Hong Kong, China’.” Flag and port Ships listed on the Register established by the Ordinance are to fly the flag of the People’s Republic of China above the flag of the Hong Kong Special Administrative Region, except when calling at a port in Taiwan. Ownership Nationality and/or domicile of owners A ship may be registered under the Ordinance, provided a majority interest in the ship is owned by one or more “qualified persons”, or the ship is operated by a “qualified person” under a demise charter. There is no requirement that a ship owned by a “qualified person” must be registered in Hong Kong. Qualified persons include:

an individual who is a resident of Hong Kong and holds a valid Hong Kong identity card; a company incorporated in Hong Kong; and a company incorporated outside Hong Kong, but which has an established place of business in Hong Kong and has registered under the Companies Ordinance in Hong Kong as “a non‑Hong Kong company” with a place of business in Hong Kong.

There are no restrictions on the ownership of shares in a company owning a Hong Kong ship or on the persons who may be directors of such company. For the purposes of registration, a ship may be divided into any number of shares or undefined parts and any number of persons may be registered as joint owners of the ship or of a share in or part of the ship. The effect of this provision is that a registered ship may be owned by a combination of qualified and unqualified persons (provided that the majority interest in the ship is owned by a qualified person).

Representative person A representative person must be appointed for each ship on the Register. The representative person may be the owner or a part owner of the ship, provided such person is a qualified person, or the representative person may be a ship manager or the ship’s agent (incorporated in Hong Kong), who has been previously approved by the Registrar to act in this role. The representative person will represent the owner in its dealings with the Registrar. Service of legal proceedings against the owner or demise charterer in respect of matters with which the Registrar is concerned may be served on the representative person, or as otherwise permitted by law in Hong Kong. Fees Charges are imposed in respect of the registration and the maintenance of all ships on the Register. These costs are calculated on the gross registered tonnage, whilst the annual tonnage charge is calculated on the net registered tonnage of the ship in question. The charges are comparable to those applicable in registers such as Bermuda, Liberia, the Norwegian International Ship Registry (NIS) and Panama. Rights of registration and transitional provisions Right to register There is no obligation for a Hong Kong company to register a ship owned by it in Hong Kong. If a ship is registered under the Ordinance, the registration may be terminated at any time and the ship registered elsewhere. Demise charter registration “Dual flag” registration is not permitted. Although a ship may be registered as a Hong Kong ship in the name of a demise charterer, that ship may not also be registered elsewhere in the name of a separate person or entity. The demise charter registration in Hong Kong is similar to the system which applies to aircraft. It recognises both that the “operator” of the ship should be entitled to register the ship under the flag of its choice, as well as the need to have all details of ownership and mortgages recorded in the same register. Transitional provisions When the Ordinance first came into effect, every ship that was then registered in Hong Kong was automatically re‑registered as a Hong Kong ship. All entries in the ‘old’ register (including existing mortgages) were entered in the Register, except those which were not considered essential by the Registrar for the purpose of registration. Registration The Registry The Registry provides a one‑stop shop service. All the applications relevant to the shipping register (i.e., registration of a ship, Minimum Safe Manning Certificate, Exemptions, Ship Station Licence, Certificate of Equivalent Competency and seafarers’ certificates/licences) can be submitted and collected at the Registry itself. Formal registration must be made to the Registrar of Ships. The registration procedures can be completed in two hours as long as the documents are in order. Type of ships eligible for registration For the purposes of the Ordinance a “ship” includes all vessels capable of being navigated

Watson, Farley & Williams July 2014

“The Hong Kong Government appointed a Steering Committee in 1987 to advise the Government on the establishment of an independent shipping registry.”

“Although a ship may be registered as a Hong Kong ship in the name of a demise charterer, that ship may not also be registered elsewhere in the name of a separate person or entity.”

The Hong Kong Shipping Register The Hong Kong Government appointed a Steering Committee in 1987 to advise the Government on the establishment of an independent shipping registry. The result was the Merchant Shipping (Registration) Ordinance (Cap 415) (the “Ordinance”), which came into effect on 3 December 1990. Until then, the United Kingdom Merchant Shipping Acts (the “Acts”) (except for the Merchant Shipping Act 1988) applied to registration of ships and to mortgages of ships in Hong Kong. A ship registered at the Port of Hong Kong was, therefore, a British ship. On 1 July 1997, Hong Kong reverted to Chinese sovereignty and became a Special Administrative Region of the People’s Republic of China. Section VIII of Annex I to the Sino‑British Joint Declaration of the transfer of sovereignty addresses the impact on the maritime industry, stating that: “The Hong Kong Special Administrative Region shall maintain Hong Kong’s previous systems of shipping management and shipping regulation, including the system for regulating conditions of seamen. The specific functions and responsibilities of the Hong Kong Special Administrative Region Government in the field of shipping shall be defined by the Hong Kong Special Administrative Region Government on its own. Private shipping businesses and shipping‑related businesses and private container terminals in Hong Kong may continue to operate freely. The Hong Kong Special Administrative Region shall be authorised by the Central People’s Government to continue to maintain a shipping register and issue related certificates under its own legislation in the name of ‘Hong Kong, China’.” Flag and port Ships listed on the Register established by the Ordinance are to fly the flag of the People’s Republic of China above the flag of the Hong Kong Special Administrative Region, except when calling at a port in Taiwan. Ownership Nationality and/or domicile of owners A ship may be registered under the Ordinance, provided a majority interest in the ship is owned by one or more “qualified persons”, or the ship is operated by a “qualified person” under a demise charter. There is no requirement that a ship owned by a “qualified person” must be registered in Hong Kong. Qualified persons include:

an individual who is a resident of Hong Kong and holds a valid Hong Kong identity card; a company incorporated in Hong Kong; and a company incorporated outside Hong Kong, but which has an established place of business in Hong Kong and has registered under the Companies Ordinance in Hong Kong as “a non‑Hong Kong company” with a place of business in Hong Kong.

There are no restrictions on the ownership of shares in a company owning a Hong Kong ship or on the persons who may be directors of such company. For the purposes of registration, a ship may be divided into any number of shares or undefined parts and any number of persons may be registered as joint owners of the ship or of a share in or part of the ship. The effect of this provision is that a registered ship may be owned by a combination of qualified and unqualified persons (provided that the majority interest in the ship is owned by a qualified person).

Representative person A representative person must be appointed for each ship on the Register. The representative person may be the owner or a part owner of the ship, provided such person is a qualified person, or the representative person may be a ship manager or the ship’s agent (incorporated in Hong Kong), who has been previously approved by the Registrar to act in this role. The representative person will represent the owner in its dealings with the Registrar. Service of legal proceedings against the owner or demise charterer in respect of matters with which the Registrar is concerned may be served on the representative person, or as otherwise permitted by law in Hong Kong. Fees Charges are imposed in respect of the registration and the maintenance of all ships on the Register. These costs are calculated on the gross registered tonnage, whilst the annual tonnage charge is calculated on the net registered tonnage of the ship in question. The charges are comparable to those applicable in registers such as Bermuda, Liberia, the Norwegian International Ship Registry (NIS) and Panama. Rights of registration and transitional provisions Right to register There is no obligation for a Hong Kong company to register a ship owned by it in Hong Kong. If a ship is registered under the Ordinance, the registration may be terminated at any time and the ship registered elsewhere. Demise charter registration “Dual flag” registration is not permitted. Although a ship may be registered as a Hong Kong ship in the name of a demise charterer, that ship may not also be registered elsewhere in the name of a separate person or entity. The demise charter registration in Hong Kong is similar to the system which applies to aircraft. It recognises both that the “operator” of the ship should be entitled to register the ship under the flag of its choice, as well as the need to have all details of ownership and mortgages recorded in the same register. Transitional provisions When the Ordinance first came into effect, every ship that was then registered in Hong Kong was automatically re‑registered as a Hong Kong ship. All entries in the ‘old’ register (including existing mortgages) were entered in the Register, except those which were not considered essential by the Registrar for the purpose of registration. Registration The Registry The Registry provides a one‑stop shop service. All the applications relevant to the shipping register (i.e., registration of a ship, Minimum Safe Manning Certificate, Exemptions, Ship Station Licence, Certificate of Equivalent Competency and seafarers’ certificates/licences) can be submitted and collected at the Registry itself. Formal registration must be made to the Registrar of Ships. The registration procedures can be completed in two hours as long as the documents are in order. Type of ships eligible for registration For the purposes of the Ordinance a “ship” includes all vessels capable of being navigated

“The Hong Kong Government appointed a Steering Committee in 1987 to advise the Government on the establishment of an independent shipping registry.”

“Although a ship may be registered as a Hong Kong ship in the name of a demise charterer, that ship may not also be registered elsewhere in the name of a separate person or entity.”

in water, other than ships propelled by oars. Hovercraft and similar air‑cushion vehicles are deemed to be ships. The Director of Marine has power to deem new categories of seagoing objects as ships. However, the following vessels are excluded :

non self‑propelled barge carrying petroleum products or dangerous goods of any substance which falls within the purview of the International Convention of Pollution from ships Annexes I, II or III; accommodation barges; fishing vessels; ships engaged in processing living resources of the sea, including whale and fish factories and aqua farming vessels; specialised ships engaged in research, expeditions or survey; non‑convention ships serving exclusively within the domestic waters of a country (other than Hong Kong and Mainland waters) and not proceeding to sea; ships propelled by nuclear energy; and mobile offshore drilling units.

Particulars recorded in the Register The Register is available for inspection whilst the Registry office is open. The following information appears on the Register:

the name of the ship, such survey details as the Registrar considers necessary for registration, the details of the ship’s origin that were provided when the application for registration was made, the name, address and description of each owner, together with details of the shares each owner has in the ship, the name and address of the representative person, and details of all mortgages registered.

In the case of a demise chartered ship, the following also appears on the Register:

the name and description of the demise charterer, the period of the demise charter as specified in the charterparty, the name and description of the owner of the ship, and the details of any mortgage granted by the owner of the ship.

It is not possible to record details of any beneficial owner where the ship is held on trust by a trustee. Name of the ship The name by which it is proposed to register a ship must be approved by the Registrar before registration. All names will be recorded in Roman alphabetic characters but may include numerals in Arabic or Roman form. A name may be reserved for a period of up to three years free of charge . A ship may also have a Chinese name, but in such a case both names must appear in the Register and on the ship. The ship’s name must be marked on the bows of the ship, and its name and port of registry must also be marked on the stem. The marking of the name on a ship must be confirmed to the Registrar means of a statutory declaration made by a Marine Department surveyor, a surveyor of a recognised classification society, or by the Master of the ship.

Tonnage When a ship is first registered its gross and net tonnage must be calculated and confirmed in accordance with tonnage regulations, made in accordance with the International Convention on Tonnage Measurement of Ships, 1969. The tonnage will be calculated by either a surveyor from the Marine Department of Hong Kong or by a surveyor appointed from one of the approved classification societies (ABS, BV, CCS, DNV, GL, KR, LR, NK and RINA). The major classification societies are the only societies currently approved. Documentation required for registration An application for registration is made to the Registrar on a prescribed form (all the forms can be downloaded online ), which includes the consent of the representative person. Completion of the application form requires particulars of the ship, its owners and demise charterers (if any) and details of their qualifications to own a ship, such as evidence of incorporation of a company. If it is not possible to produce the original title documents at the time of registration, the ship can be provisionally registered for an interim period during which the original title documents should be submitted to the Registrar within one month. Provided adequate reasons for delays are given by the owner(s), it will be possible to renew provisional registrations for a further period of one month maximum . Mortgages Form and registration Once a ship is registered (whether provisionally or permanently) a mortgage can be recorded in the Register using form RS/M1. Particulars of each mortgage will be entered in the Register and the date and time of registration will be endorsed on the mortgage itself. However, it is not necessary for any endorsement of the mortgage to be made on the certificate of registry carried on board the ship. If a ship is provisionally registered, the mortgagee is also required to produce a “Confirmation by Mortgagee” to the Registrar. This specified form acknowledges that the mortgagee has seen the original title document, and that it knows the original title document will not be produced to the Registrar during registration. Current legal practice requires a mortgage to be supplemented by a collateral deed of covenants, a document which sets out the detailed obligations of the owner. It is not necessary for this to be registered in the Register, but the particulars of the charges created under the mortgage and the deed of covenants must be registered with the Registrar of Companies, if the mortgage and deed of covenants are granted by a company incorporated in Hong Kong or a “non‑Hong Kong” company registered in Hong Kong. The mortgage and deed of covenants must be registered at the Hong Kong Companies Registry within one month of the date of the mortgage or deed, failing which the security created may become unenforceable. Priorities Priorities among registered mortgages are governed by the time at which they were registered, and not the order in which they were created. Transfer and release It is possible for a mortgage to be transferred or assigned to another person. Discharge of a mortgage is effected by execution of a separate memorandum of discharge in prescribed form.

“The Director of Marine has power to deem new categories of seagoing objects as ships.”

“Once a ship is registered (whether provisionally or permanently) a mortgage can be recorded in the Register...”

3 http://www.mardep.gov.hk/en/ forms/home.html

4 Section 3.2 http://www.mardep.gov.hk/en/ pub_services/sec03.html