payment of an annual fee.11 Shortly afterwards, Panama adapted its laws to attract
shipowners from anywhere in the world, and thus the two major international
open registers were established.
The use of an open register generally involves payment of an initial registration
fee and an annual ‘tonnage tax’, which enables the register to cover its costs and
make a profit. In return, the register offers regulations designed to suit a legal and
commercial environment specially designed to suit a shipowner trading
internationally. There are major differences in the way registers approach this
task, but in general the areas addressed are:
• Tax. There are generally no taxes on profits or fiscal controls. The only tax is
the subscription tax per net registered ton.
• Crewing. The shipping company has complete freedom to recruit internationally.
There is no requirement to employ high-wage nationals, as either officers or
crew. However, regulations regarding crew standards and training may be
enforced, depending on the policy of the register.
• Company law. As a rule, the shipping company is given considerable freedom
over its corporate activities. For example, ownership of the stock in the company
need not be disclosed; shares are often in ‘bearer’ form, which means that they
belong to the person who holds them; liability can be limited to a one-ship
company; and the company is not required to produce audited accounts. There
are generally few regulations regarding the appointment of directors and the
administration of business.
FIGURE 12.2 World merchant fleet by flag
Source: Lloyd’s Register of Shipping