The shipping industry is largely dependent on ship financing by banks and other financing institutions which invariably seek to protect their interests by the creation of various forms of security over vessels, such as registration of a mortgage over in a well-regulated jurisdiction.
Maltese law provides for a well-developed legal framework of maritime privileges and mortgages. Foreign mortgages are fully recognised. A registered mortgage securing a debt which is certain, liquidated and due, is deemed an executive title by law and enjoys higher ranking over other privileged claims.
Although the underlying ship financing transaction is sometimes rather complex in nature, the registration of a mortgage over a Maltese-registered vessel is a relatively straight-forward process. A ship under construction may also be registered as it qualifies as a ship that can be registered under the Merchant Shipping Act. Besides the security granted by the registration of a mortgage, a mortgagee may also prohibit the registration of further mortgages over a security vessel.
Earnings on loan financing facilities secured by Maltese registered mortgages are exempt from tax in Malta.
Fenech Farrugia Fiott Legal assists banks, financial institutions and ship owners by:
- Advising on ship financing transactions and security documents, including assisting with the drafting of Term Sheets, Loan Agreements, Deeds of Covenant, Assignment of Earning and Insurances and other security documents;
- Advising on the structuring of financing arrangements;
- Advising and assisting with the registration of pledges over securities in Maltese-registered ship owning companies;
- Tax Advice if and when required.
For further information, kindly contact Dr Christian Farrugia.