FLYING THE RIGHT FLAG

Mark Santangeli of Ogier on navigating the course of yacht registration in the Cayman Islands.

The purchase of a yacht or superyacht is one of life’s great achievements and something to be celebrated. But it does bring a myriad of choices and considerations that can seem overwhelming. Two of the most important considerations for any yacht owner will be the choice of state in which to flag the vessel and the ownership structure for the vessel.

For many years, the Cayman Islands has been one of the most popular jurisdictions for the flagging of yacht and superyachts. The Cayman Islands currently has over 2,500 registered vessels. The jurisdiction is a category 1 British Registry and, accordingly, all Cayman registered vessels enjoy British Flag privileges including full British Consular services, Royal Naval assistance and worldwide protection for Cayman-flagged vessels. It also offers various types of yacht registration, including full, interim, term, under construction, and demise charter options.

The Cayman Islands Shipping Registry is world-renowned for its user friendly approach and technical expertise. It boasts a responsive, client-focused reputation (vessel and mortgage registration can be effected within 24 hours). The Registry’s extended global footprint stretches to 15 countries with 19 locations, and offers a choice of three ports: George Town, the Creek and Bloody Bay. That’s an opportunity to have the same yacht name registered in three ports! There is also no obligation for a Cayman-flagged yacht to make physical calls in the Cayman Islands.

In February this year, the Cayman Islands further enhanced its maritime offering through the passing of the Maritime Shipping Act, 2024. Two important changes included (a) the stipulation that all seafarers working aboard Cayman Islands vessels (including private yachts and pleasure vessels) must now be employed under a written employment agreement signed by both the seafarer and by, or on behalf of, the employer and (b) widening the criteria of persons (both individuals and corporates) qualified to be owners of Cayman Islands vessels (which now aligns with the United Kingdom).

This law change allows for an even greater degree of flexibility on who is qualified to own a yacht. Invariably, the optimal choice of ownership structure will be fact specific and is dependent upon various factors including financial status, legal analysis, tax treatment and operational efficiency. It is common for yachts to be held by a special purpose company located in a politically stable, tax neutral and sophisticated jurisdiction such as the Cayman Islands. If the ownership of a yacht is not held by a Cayman resident or a Cayman company having its principal place of business in the Cayman Islands, then a “representative person” must be appointed in Cayman.

Ogier can assist clients in navigating these issues and implementing the above. Our team of experienced lawyers and corporate administration professionals have a deep understanding of the market. Not only can we deal with yacht registration, but we can also offer advice and services related to yacht ownership and beyond. This may involve some careful estate planning through the implementation of a trust by our Private Wealth team. If the purchase is being financed, we can advise on the security arrangements over the vessel. Our corporate services business, Ogier Global, can provide directorship and trustee services. When waters get choppy, our specialists in Dispute Resolution can help you navigate disputes (including security enforcement, seizure, arrestment, freezing injunctions, restructuring and insolvency).

While this piece is focused on the Cayman Islands, our specialist Aviation and Marine Team is global and can advise on yacht registrations and holding structures in Jersey, Guernsey and the British Virgin Islands. If you are in a jurisdiction where we don’t operate, our specialists can seek the optimum solution by accessing the required advice through our network of international law firms and advisors.

So if looking where to turn next after purchasing a yacht, make us your first port of call and let us assist you in navigating the course ahead.

For more details visit www.ogier.com