Marshall Islands

International Registries, Inc.

Gulf Superyacht Summit 2024 programme announced

SuperYacht Times is proud to announce the full schedule for this year’s Gulf Superyacht Summit 2024, held at the Jumeirah Beach Hotel, Dubai.

Gulf Superyacht Summit 2024 programme

Selecting the appropriate flag for a superyacht ranks among the most crucial decisions owners face, given its substantial influence on the vessel's operational, legal, and fiscal aspects. The flag state has the authority and responsibility to enforce regulations over vessels registered under its flag, including inspection, certification, and the issuance of safety and environmental compliance documents.<img src="https://photo-assets.superyachttimes.com/photo/205758/image/large-6d2d6681818873190c90023ccf965b6f.jpg" data-gid="gid://syiq/Photo/205758">A flag state is defined as the country or governmental authority under whose regulations a vessel is registered or licensed. While this may be the vessel owner's country of residence, it is more frequently, in the context of superyachting, an international ship registry located in a jurisdiction whose legal frameworks are specifically designed to accommodate the intricacies of yacht ownership and charter operations.Origins and evolution of the regulatory framework:Understanding the origins and evolution of the regulatory framework for yachts is crucial for comprehending the complexities of Flag Administrations. Prior to 1996, legislation by flag states lacked specific requirements tailored for yachts. Engel-Jan de Boer, the Yacht Segment Director at <a data-gid="gid://syiq/Company/1452" href="#managed-by-system" rel="noopener noreferrer" target="_blank" title="Lloyd's Register (Company)">Lloyd's Register</a> pointed out: “Until 1996, the industry adhered to the Yachts and Small Crafts Rules. That year, we introduced the Special Service Craft Rules, incorporating the first explicit requirements for fire safety and stability.”' <img src="https://photo-assets.superyachttimes.com/photo/305751/image/large-09f0adf6f6e2cde958d15a30de316ff9.jpg" data-gid="gid://syiq/Photo/305751">Following these initial steps engendered more detailed regulation, the Maritime and Coastguard Agency (MCA) responsible for implementing British and international maritime law and safety policy in conjunction with the Red Ensign Group developed the Code of Practice for the Safety of Large Commercial Sailing and Motor Vessels, known as 'LY1', in 1997. This code, established for the Red Ensign Group, emerged as a foundational regulatory standard for yachts, marking a significant advancement in yacht safety and compliance.LY1 established unique and internationally recognised safety standards for the construction, operation, and crewing of large yachts, applicable to commercially used vessels for sport or pleasure measuring 24 metres in load line length or more. This code has undergone significant evolution, leading to the Large Commercial Yacht Code (LY2) in 2004, and subsequently LY3 in 2013. The most recent iteration, the Red Ensign Group Yacht Code, came into effect on 1 January 2019, marking the latest advancement in regulatory standards for yachts. On the 1st of July 2024 a further revision will enter into force, incorporating the latest SOLAS amendments (where appropriate for yachts), provisions for alternative fuels, design requirements for new trends (i.e. glazed openings below the waterline, recreational dive facilities etc.).The Red Ensign Group comprises of British Shipping Registers, including the United Kingdom, the Crown Dependencies (Isle of Man, Guernsey, and Jersey), and the UK Overseas Territories (Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, St Helena, and the Turks &amp; Caicos Islands). Each member operates its own shipping register within its jurisdiction.The Red Ensign Group's shipping registers are divided into two primary categories to accommodate a diverse range of vessel types and sizes. Category 1 Registers have the capability to register ships of unlimited tonnage and type, including those jurisdictions such as Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, the Isle of Man, and the United Kingdom, showcasing their capacity to handle a vast spectrum of maritime assets. On the other hand, Category 2 Registers are designated for the registration of commercial ships and pleasure vessels up to 150 gross tons (GT), with the possibility of extending this limit to 400GT through specific agreements with the UK. This category includes Anguilla, the Falkland Islands, Guernsey, Jersey, Montserrat, St Helena, and the Turks &amp; Caicos Islands.<img src="https://photo-assets.superyachttimes.com/photo/305763/image/large-5f3003265f7e22d261e8a52ad0b04d63.jpg" data-gid="gid://syiq/Photo/305763">Commenting on the evolution and the Red Ensign Group's significant influence on Flag State regulation, Phil Noad the Regional Director, Europe &amp; Africa of the Cayman Islands Shipping Registry stated: ”Over the years, with industry engagement, the yacht code evolved with changes in design trends and technology, and to incorporate the Maritime Labour Convention which covered crew accommodation standards. Since the yacht code was a collaborative effort, from all REG members who had an interest in yachting, it was rebranded in 2019 and is now referred to as the REG Yacht Code and covers both large yachts (max 12 pax.) and passenger yachts (max 36 pax.)”.Other flags entering the yachting sector have either adopted the REG Yacht Code or created their own versions, which they have submitted to the IMO for dissemination to member states.According to Engel-Jan de Boer, “this initiative not only showcased the group's pre-existing capabilities in shaping yachting regulation but also marked a pivotal moment of consolidation. Before 1997, yacht regulations were a disparate amalgamation drawn from various international conventions. The introduction of a unified code by the Red Ensign Group centralised these standards, establishing them as pioneers in the yacht industry”. SYT iQ&nbsp;data:According to <a href="https://sytiq.superyachttimes.com/" rel="noopener noreferrer" target="_blank" title="">SYT iQ</a>, in the segment of yachts that measure over 30-metres in length and are presently active, the Cayman Islands stands as the most utilised flag state. Malta holds the position of the second most utilised registry with 714 vessels of this size. The United States follows with 572 registrations, while the United Kingdom and the Republic of the Marshall Islands (hereinafter, “Marshall Islands”) have registered 404 and 340 yachts, respectively. The chart below provides a detailed visualisation of the leading ten nations in yacht flag registration.<img src="https://photo-assets.superyachttimes.com/photo/305737/image/large-e519d4b1f8a31ecadc8a665410149dfe.png" data-gid="gid://syiq/Photo/305737">Moreover, an analysis of flag state market shares for yachts exceeding 30-metres over the past five years reveals relative stability in the rankings. The Cayman Islands maintain their leading position, despite a slight decrease from 25% in 2019 to 22% in 2024. Whilst Malta's share has experienced a 3% uptick during the same period. These shifts are depicted in the pie chart below.<img src="https://photo-assets.superyachttimes.com/photo/305739/image/large-7afd0bd935e23d164a3fee6744e05398.png" data-gid="gid://syiq/Photo/305739">Commenting on the strong performance of the Cayman Islands, Phil Noad states: “The Cayman Registry excels in supervising yachts under construction and in the survey and certification of yachts in service. This requires a significant investment in specialist surveyor resources, strategically located to provide expertise and experience. Such expertise is crucial, especially when developing novel arrangements to meet the designer's or owner’s specifications”.<img src="https://photo-assets.superyachttimes.com/photo/115705/image/large-aad7a995391f631922360393890fae38.jpg" data-gid="gid://syiq/Photo/115705">Phil Noad further expanded stating: “We are currently working with approximately 70 yacht builders, supervising about 250 yachts under construction. For yachts in service, our clients value an efficient, accessible, and supportive approach from the Flag in all aspects, including registration, survey, and seafarer welfare matters.”An analysis conducted through <a href="https://sytiq.superyachttimes.com/" rel="noopener noreferrer" target="_blank" title="">SYT iQ</a>, evaluating flag performance among flag states with more than 50 yachts registered, based on their average Gross Tonnage (GT), reveals a significant shift in rankings.<img src="https://photo-assets.superyachttimes.com/photo/305738/image/large-0dc8919a011c3ab6e3dd53f6a4f20440.jpeg" data-gid="gid://syiq/Photo/305738">The Cayman Islands remain at the top, followed by the Isle of Man, with the UAE in third place. It's important to note, however, that the UAE has only 78 yachts registered. The Marshall Islands climb to the fourth spot. Furthermore, Malta is further down the list, indicating that, although there are many yachts registered under the Maltese flag, they tend to be on the lower end in terms of GT.Additionally, an important flag administration absent from the graph is the United States, primarily due to regulations that limit US flag registration to vessels up to 300 GT. This restriction significantly narrows the scope of yachts eligible for US flagging. While exemptions have been granted for a select few larger vessels, often for prominent owners desiring the American flag, such exceptions are rare. One of the most notable examples is the 96.25-metre <a data-gid="gid://syiq/Company/23" href="#managed-by-system" rel="noopener noreferrer" target="_blank" title="Lürssen Yachts (Company)">Lürssen</a> superyacht <a data-gid="gid://syiq/Yacht/282" href="#managed-by-system" rel="noopener noreferrer" target="_blank" title="Limitless96.25m (315'9&quot;)Lürssen Yachts1997">Limitless</a>.<img src="https://photo-assets.superyachttimes.com/photo/204350/image/large-40a5af9ab9b7f4b26887a02c5124ec2e.jpg" data-gid="gid://syiq/Photo/204350"> Why are some flags selected over others?:The choice among jurisdictions such as the Marshall Islands, Malta, or the Cayman Islands is significantly impacted by differences in operating taxes, a key consideration for many yacht owners. Additionally, the decision on how to operate the yacht, whether privately or commercially, and within Europe or beyond, further influences the selection of a flag state.Financial incentives within the EU often lead owners to favour Malta, whereas outside the EU, the Marshall Islands and the Cayman Islands are popular. In providing an overview of flag registration trends, Phil Noad notes that the landscape has remained stable over the past five years, with Cayman, Marshall Islands, and Malta solidifying their positions as the main players. <img src="https://photo-assets.superyachttimes.com/photo/257092/image/large-94bf5fb6104389ef395df61666102b1a.jpg" data-gid="gid://syiq/Photo/257092">Ivan Tabone, Chief Officer at Malta's Merchant Shipping Directorate, underscores Malta's holistic approach to maritime regulation, emphasising the balance between compliance with European Union standards and offering financial incentives in line with EU law. Tabone highlights the registry's commitment to accessibility and responsiveness, stating, "Alongside financial benefits, our open communication and accessibility are crucial. Clients have direct access to the registry with limited bureaucratic hurdles, and our services are available 24/7." He further elaborates, " we operate under the ministry of transport and are a governmental entity, our approach is akin to a boutique registry, focused on listening to and continuously engaging with our clients."Malta has historically offered a favourable VAT scheme. Although the EU has revised the reduced VAT scheme in recent years, Malta continues to provide a VAT lease scheme that allows for a reduced rate. This feature remains particularly attractive for EU citizens, making Malta the most appealing option for those looking to benefit from such financial advantages.Jo Assael, Yachts Commercial Director at <a data-gid="gid://syiq/Company/7590" href="#managed-by-system" rel="noopener noreferrer" target="_blank" title="International Registries, Inc. (Marshall Islands Registry) (Company)">International Registries (U.K.) Limited</a>, which provides administrative and technical support to the <a data-gid="gid://syiq/Company/7590" href="#managed-by-system" rel="noopener noreferrer" target="_blank" title="International Registries, Inc. (Marshall Islands Registry) (Company)">Marshall Islands Registry</a>, emphasises the importance of flag state engagement with yacht owners to understand their needs, including fiscal matters. This sets the Marshall Islands apart from other flag states that may distance themselves from such concerns. He notes: “The decision to register in a specific jurisdiction is often influenced by the owning company or owner’s tax residency and can influence whether a yacht needs to register privately or commercially. Ignoring an owner's fiscal situation is therefore not prudent; we actively collaborate with our clients to find the best combinations of registration and operational solutions to meet their needs.”&nbsp;Assael highlights the <a data-gid="gid://syiq/Company/7590" href="#managed-by-system" rel="noopener noreferrer" target="_blank" title="International Registries, Inc. (Marshall Islands Registry) (Company)">Marshall Islands Registry</a>’s flexibility in supporting owners through complex decisions. This is exemplified by the development of innovative solutions for owners over the years including the 'Yacht Engaged in Trade' (YET) program. Introduced by the Marshall Islands in 2015, the program was developed to meet owners’ requests to allow privately registered vessels to conduct limited charters, whilst remaining in compliance with national and international regulations.The relationship between flag states and class societies:The relationship between flag states and class societies is both intricate and interdependent. As Phil Noad and Engel-Jan de Boer point out, class societies, (also referred to as Recognised Organisations (ROs) when performing statutory work on behalf of the flag state), are tasked with the technical vetting of vessels, focusing on structural, mechanical, and electrical integrity. They delve into what Engel-Jan de Boer refers to as 'hardcore technical' aspects of maritime safety, such as hull strength, machinery operation, and anchorage systems, ensuring a vessel's robustness and operational capabilities.<img src="https://photo-assets.superyachttimes.com/photo/305754/image/large-c1de6c556ca7d0a077c2eebe42536674.jpg" data-gid="gid://syiq/Photo/305754">Whilst Flag administrations, enforce compliance with statutory regulations mandated by the International Maritime Organisation (IMO). These cover an array of safety and environmental standards, including fire safety, lifesaving equipment, pollution prevention, and crew welfare. The administrations may delegate certain survey and certification responsibilities to ROs but maintain ultimate accountability for the vessel's adherence to international conventions and codes.Engel-Jan de Boer highlights the symbiotic nature of this relationship, where statutory and class certifications are mutually dependent. A yacht above 24-metres must satisfy class society technical evaluations to qualify for statutory certifications, and vice versa. This dual compliance upholds stringent standards of safety and seaworthiness, ensuring that vessels are not only structurally and mechanically sound but also properly manned and equipped for safe operation. This collaborative framework between flag states and class societies is vital for maintaining a vessel's legitimacy for navigation in the international maritime arena.Furthermore, Engel-Jan de Boer clarifies the nature of <a data-gid="gid://syiq/Company/1452" href="#managed-by-system" rel="noopener noreferrer" target="_blank" title="Lloyd's Register (Company)">Lloyd's Register</a>'s agreements with flag states: “We have contracts with all major flag states, encompassing both the yachting and commercial sectors. Currently, we hold approximately 140 contracts with various flag states, detailing our authorised activities and limitations. Contrary to a common misconception, we do not receive payment from flag states. Instead, our agreements authorise us to conduct certain tasks on their behalf. Consequently, the fees for our services are billed directly to the vessel's owner or the shipyard, not the flag state”.Evaluating flag state performance:A primary indicator of a flag state's quality is its performance in key Port State Control (PSC) Memoranda of Understanding (MoU) regions. The International Chamber of Shipping publishes an annual Flag State Performance Table, which evaluates PSC performance across the Paris MoU, Tokyo MoU, and the United States Coast Guard (USCG) Qualship 21 program.It's crucial to understand that when a yacht enters a new jurisdiction, the PSC history of the yacht, as well as that of other vessels registered under the same flag is taken into account to determine the onboard safety standards expected. Thus, yachts registered under a flag known for high performance ratings may undergo fewer inspections, benefiting the owner.Additionally, the <a href="https://www.ics-shipping.org/resource/shipping-industry-flag-state-performance-table-2023-2024/" rel="noopener noreferrer" target="_blank" title="">Flag State Performance Table</a> examines if a flag state has ratified major international maritime treaties, employs only high-performing Recognised Organisations (ROs), meets its reporting obligations to the International Maritime Organisation (IMO) and the International Labour Organisation (ILO), participates actively in IMO meetings, and has been audited by the IMO.<img src="https://photo-assets.superyachttimes.com/photo/280196/image/large-16021de48362c7466300cd38a66ea1de.jpg" data-gid="gid://syiq/Photo/280196">The Marshall Islands has now achieved the United States Coast Guard’s QUALSHIP 21 status for the 20th consecutive year. Bill Gallagher, President of International Registries, Inc. commented: "We take our commitment to high-quality and safe vessel operation seriously. It is the focus of everything that we do. We work closely with our owners, operators, and teams around the world to facilitate high levels of compliance, and actively engage in supporting our clients’ compliance efforts.”

SYT iQ Insight: What are the most popular flag states?

Selecting the appropriate flag for a superyacht ranks among the most crucial decisions owners face.
