The Republic of the Marshall Islands is located in the middle of the Pacific Ocean and its territory is made up of chains of islands and atolls that distinguish it from other regions of the world, for this reason, navigation has always represented a fundamental part of the life of the Marshallese people, so it was necessary to develop a system that would allow them to adapt in such a way that today the Marshall Islands have the third largest registry of ships in the world with 3,100 vessels and more than 100 gross tons, which represents an important number of the world fleet.

Marshall Islands Ship Registry

Its ship registration system, besides being one of the most modern and highest quality in the world, has worldwide recognition due to its effective management and all the contributions they have made to the safety and security of maritime space. This service is provided by our partners.

Why is this? The flag that a vessel carries will determine the applicable mortgage law on a vessel, for this reason, ship owners and operators often choose the Marshall Islands as the flag state for their vessel, as mortgages on vessels from the Marshall Islands are accepted by financiers. In addition to this, it is well known that non-resident companies in the Marshall Islands are exempt from taxation, including lenders acting as Special Purpose Companies, so when lending to non-resident Marshall Islands companies as borrowers, in the case of security mortgages on vessels you will not have to worry about further regulation.

You might be asking, what is Ship Mortgage? A ship mortgage grants the mortgagee rights in rem in a ship to secure the performance of the debtor's obligations. In addition to a preferential right to the proceeds from the sale of the vessel, a ship mortgage can also secure rights of private sale and arrestment. There is no mortgage form in the IMR. However, a ship mortgage may be registered at any office of the Marshall Islands Maritime & Corporate Administrators, Inc. 

According to the Marshall Island Business Corporation Act, there are age limit requirements for the use of the Marshall Islands flag, this is around 20 years, for this reason, an inspection is required before registration.

Generally, private yachts under 12 meters in length do not qualify. However, this may be waived at the discretion of the Maritime Administrator and the vessel may be documented or re-documented where it meets all other applicable requirements for registration and it has been satisfactorily demonstrated that there is an absolute and genuine need for such an exemption. One way of verifying this is through a satisfactory assessment of the vessel's condition and seaworthiness. 

In this sense, it can be seen that the registration of vessels in the Marshall Islands does not impose major restrictions according to the type of vessel that will be accepted, only in certain cases based on the time and size of the units as stated before. We can find among the most common types of vessels, bulk carriers, tankers, container ships, and even yachts that will have the facility to complete their registration by following the steps that we will explain below.

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Foreign Maritime Entity (FME)

Once this is understood, it is necessary to know that the Marshall Islands offer the possibility to any company incorporated in the country to use the flag of its jurisdiction; likewise, to any Foreign Maritime Entity (FME) according to section 119 of the Marshall Island Business Corporation Act. This process can take about one business day.

A foreign maritime entity means a legal entity, whether or not a legal person, that is recognized as having the capacity to own a vessel under the laws of the jurisdiction in which the entity has its existence, in this case, the Republic of the Marshall Islands.

How to Set up a Foreign Maritime Entity (FME) in the Marshall Islands?

For the creation of a Foreign Maritime Entity operating or owning a vessel in the Marshall Islands, the following information must be provided directly to one of the offices of International Registries. These can be located in different parts of the world. 

A certified copy of the articles of incorporation, articles of association, or another incorporation document of the entity will be required and a proof of the current existence of the foreign entity under the laws of the state of its formation (such as a Certificate of Good Standing) will also be required.

In addition to this, the following information should be included: 

-Name and legal status of the entity

-Jurisdiction and date of its creation

-The declaration that the entity is entitled to own or operate a vessel

-The declaration that the entity has the capacity to sue and be sued in its own name

-Address of the principal place of business of the entity and, if such place of business is not within the jurisdiction of the creation of the entity, the address of its principal place of business or the name and address of its legal trustee or legal representative within the jurisdiction of the creation of the entity

-Name(s) and full address(es) of the person(s) to whom the management of the entity is vested by law at the time of the application

-Name and address within the republic of the registered agent of the entity and a statement that the registered agent will be its agent upon whom process may be served against it

-The title or titles, or if not an officer of the entity, is the basis of the authority of the person or persons executing the document.

Registration must be done in English, so documents in any other foreign language must be translated. 

If you want to know more about this process or about business opportunities in the Marshall Islands, here at Mundo, we are ready to help you. 

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