Cyprus – The Shipping Limited Liability Company Law 2022: Opportunities and Challenges

Cyprus is one of the few shipping centres worldwide which combines an international registry of recognised prestige and quality, as well as a shipping complex with a wide range of shipping and related services, as mentioned by the Shipping Deputy Minister. Despite the challenges, it has shown resilience and remains the EU’s third largest fleet and eleventh globally. Remarkably, in 2023, the Cyprus Register of Ships achieved an impressive rise from 13th place in 2022 to 8th place in the Paris MoU White List, a list representing quality flags with a consistently low detention history. This proves that the Cyprus Register of Ships maintains high quality and safety standards for ships flying the Cyprus flag.

The Cyprus Shipping Deputy Ministry (SDM) has contributed tremendously to this success making significant progress since its inception. It prioritises the Cyprus flag’s progress and supports the European maritime industry’s development by advancing new green technologies, creating opportunities for jobs and growth, and providing a first-mover advantage to the EU shipping industry.

The “SEA Change 2030” long-term strategy, being the outcome of a collaborative process, with input from internal, local and international stakeholders, was created by the SDM as part of this evolving process. It contains 35 individual actions to deliver sustainable progress for shipping categorised under three main pillars: Sustainable, Extrovert, and Adaptable. The strategy aims to improve the Cyprus flag’s competitiveness in international shipping, and to simplify the procedures and the operating regime of Cypriot shipping companies owning Cyprus-flagged vessels.

The recently introduced “Shipping Limited Liability Company Law” of 2022 (the “SLLC Law“) is amongst the steps taken towards the implementation of the “SEA Change 2030“. Its enactment has been a significant milestone to corporate and maritime law. SLLC Law’s structure is inspired by the Companies Law (Cap. 113). Through provisions aiming to simplify various procedures and aspects, the intention is to make the establishment of a shipping limited liability company more flexible and attractive to interested parties.

The SLLC Law was enacted to create a new form of limited liability company, the “Shipping Limited Liability Company” (SLLC) having as sole purpose to own and operate Cyprus-flagged vessels. The SLLC Law regulates the procedure from the setting up and registration of the SLLCs to their liquidation. It also establishes the Department of the SDM as the competent authority relating to the SLLCs. The department will be supervised by the SDM, while the SDM’s General Director, who by law is also the Registrar of Cyprus-flagged vessels, will also act as the SLLCs’ Registrar. The aim is to create a one-stop-shop framework for ship-owning companies and their shareholders within the SDM. Consequently, the SDM will deal with all matters currently falling within the competence of the Cyprus Registrar of Companies along with all the aspects of maritime law.

The SLLC Law empowers current Cyprus-registered shipping companies that own Cyprus-flagged vessels to request their transfer to the SLLCs’ Registry, subject to specific conditions. Importantly, a significant difference with the Companies Law is the requirement for SLLCs’ secretary to be a lawyer and to effectively perform such duties pursuant to the provisions of the SLLC Law.

The SLLC Law’s enactment has been undoubtedly very promising, signalling the beginning of a new era for Cyprus corporate and maritime law. However, the delay in its actual implementation may have been perceived as a preventive factor for shipowners who wished to have their companies transferred under this new SLLCs’ Registrar. This necessitates prompt actions to be taken for the actual implementation of the new legislation by the creation of the SLLCs’ Registrar for effecting the transferring of the current Cyprus-registered shipping entities under the said registry and new SLLCs’ registration.

This article was published in the Maritime Cyprus Edition of GOLD magazine on 17.09.2023.

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