Easier registration of foreign-owned ships in Denmark

By: Partner Rune Aaagaard, November 2017

Currently, in order to be registered under the Danish flag foreign-owned ships must be effectively administered and controlled from Denmark and the foreign shipowner must be established in Denmark. A new bill proposes to relax these requirement as from 1 January 2018 making it easier for foreign entities to register their ships under the Danish flag. The main characteristics of this bill will be reviewed in this newsletter.

The bill has been proposed to maintain and increase the attractiveness of the Danish flag for Danish as well as foreign ship-owners.

Current requirements
In order for a foreign-owned ship to be registered under the Danish flag essentially two requirements must be satisfied by the ship-owner;

  1. establishment in Denmark and
  2. activity in Denmark.

The requirement regarding establishment in Denmark can be satisfied by a foreign-company having

  • its main office or business located in Denmark,
  • a subsidiary company, branch office or agency office in Den-mark or
  • for EC/EEA entities designation of an Danish entity or individual as agent vested with authority to be contacted by the authorities for the purpose of control and who can receive legal notices on behalf of the shipowner (similar to a process agent).

The requirement regarding activity in Denmark requires that a vessel must be effectively administered or controlled from Denmark. This requirement is the Danish implementation of the ‘genuine link’ principle as per the Factortame case before the European Court of Justice (C-213/89). This requirement effectively demands that foreign shipowners either appointed a Danish entity as technical and commercial manager or by way of a bareboat charter to a Danish company.

Proposed (and relaxed) requirements
After enactment of the bill the requirement re. establishment in Denmark will be relaxed. The bill proposes that it is sufficient for a foreign shipowner to designate a natural or legal person as representative of the ship-owner in Denmark.

Additionally, the extent of the activity required to be exercised in Denmark will be relaxed. The bill proposes that the activity requirement may be fulfilled by the ship-owner having certain limited activity in Den-mark such as declaring that the ship’s technical or commercial management is carried out from Denmark or if the Document of Compliance for the ship is issued to a Danish shipping company.

For further information
Please contact partner Rune Aagaard, raa@focus-advokater.dk, mobile +45 2710 5221 or associate Narine Sarkisian, ns@focus-advokater.dk, mobile +45 2815 7626.

Focus Advokater provides legal advice and services in respect of sale and purchase of ships, ship finance as well as general shipping, offshore and transportation. Should you need a more thorough review of the bill or specific advice, please do not hesitate to contact us.

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