Ship Registration: Law and Practice

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21.1 Panama is situated on the isthmus connecting the continents of North and South America, the Panama Canal linking the Caribbean Sea with the Pacific Ocean. The country has a population of 3.7 million, more than 1.6 million of whom live in the capital, Panama City. Panama gained its independence from Colombia in 1903 and is now a republic. A number of US military bases near the Panama Canal, and the canal itself, was transferred to Panama in December 1999. Between 2007 and 2016 the canal was widened to double the transit capacity, creating a new ‘post-Panamax’ category of vessel. The government of the Republic of Panama consists of a legislative assembly, an executive branch with executive power vested in the President, assisted by a Vice-President and an appointed cabinet, and a judicial branch. The legal tender is the Balboa, but following a treaty of 1904 US currency is used. Balboa paper currency is not printed, only coins. 21.2 Panama is the largest register in the world by dead-weight tonnage with over 18% of the global merchant fleet sailing under its flag.1 The flag State appears within the Paris MOU White List published in July 2017.2 Since October 2017, the Panama flag administration has agreed to the issuance of certain documents and certificates in electronic format, which can be verified online using an online resource and unique QR codes shown on each electronic certificate.3

Sources of law

21.3 Law No. 8 of 1925 of the Republic of Panama created the National Merchant Marine which is the foundation of Panama’s open registry system. The ‘dual registry system’ was introduced as a result of Law No. 11 of 1973, as amended by Law No. 83 of 1973. The law relating to the registration and validity of ship mortgages was changed by Law No. 14 of 1980 and Law No. 43 of 1984. All these statutes have now been incorporated into Law No. 57 of 2008 on the National Merchant Marine and Law No. 55 of 2008 which replaces the whole of Book II of the Code of Commerce of Panama, now known as the Law on Maritime Commerce.

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Vessel eligibility

Vessel type

21.4 Vessels and floating structures of any size, age or type may be enrolled on the Panamanian flag.

Age limits

21.5 Vessels engaged in commercial trade that are over 20 years old on first registration are subject to a safety inspection by the Directorate of Safety at Sea of the Panama Maritime Authority (‘SEGUMAR’) as a precondition of issue of a certificate of permanent registry. Thereafter an inspection is required on an annual basis.


21.6 A Panamanian-registered vessel may either be owned by a Panamanian or foreign national who may be an individual, a corporation or other legal entity.

Company formation

21.7 If a foreign ship-owner wishes to use a Panamanian company as the owner of a vessel to be registered in Panama, a company can be incorporated within 2–4 days or can be purchased from a local law firm or company registration agent. The relevant law is set out in Law No. 32 of 1927.

Registered office and non-resident status

21.8 A company must have a lawyer or law firm actung as registered agent of the company. A registered office is not required, other than to verify that the company’s domicile is Panama, and service of notice should be made personally on the president of the company or whoever in the board is designated as legal representative. A company which does not conduct business in the Republic of Panama will be treated as non-resident in Panama.


21.9 A Panamanian company requires two subscribers on incorporation, but may subsequently have only one shareholder. Shares may be issued to named shareholders, or as bearer shares. The issuance of bearer shares is now subject to a custody regime, as created by Law No. 47 of 2013, as modified by Law No. 18 of 2015, and if the company chooses to issue bearer shares, these must be placed with a custodian (which can be duly authorised lawyer, law firm or bank) together with a sworn document confirming the name of the ultimate beneficial owner. There is no restriction on the nationality of shareholders.

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Directors and secretary

21.10 A minimum of three directors and three officers are required (president, treasurer and secretary). The minimum three officer positions may be held by one person and the officers may also be directors. Their nationality or place of residence is irrelevant. A corporation may now act as a director and officer of a Panamanian company (Law No. 5 of 1997). No secretary is required to be appointed.

Bareboat charter registration

21.11 Panama was among the first maritime nations to permit the ‘flagging-in’ of vessels, sometimes known in Panama as the ‘dual registry system’. The original system under Law No. 11 of 1973 was repealed by Law No. 57 of 2008, under which now a foreign flag vessel that is subject to a bareboat charter may be registered in Panama for renewable periods without abandoning the primary registration. In such cases the vessel is entered in a Special Register in the joint names of the owner and charterer and is issued with a special navigation licence. The licence will refer to the port of registry in the State of primary registration and will also include details of any mortgages or other encumbrances recorded on the primary register. 21.12 In order to register a vessel on the Special Register, a certified copy of the original bareboat charterparty, the consent of the ship-owner, the primary flag State authority and any mortgagees must be filed with the Directorate General of Merchant Marine (‘DIGEMAR’) in Panama City, together with a certificate showing the registration in the primary register. During the period of such registration, ownership title may not be recorded, nor any mortgages or encumbrances. Mortgages recorded in the State of primary registration remain subject to the law of that State. 21.13 By virtue of Law No. 83 of 1973, as repealed by Law No. 57 of 2008, a vessel registered in the ordinary way in Panama and subject to a bareboat charterparty may be flagged out to a foreign registry without losing its underlying Panamanian registration, provided the government of the State of secondary registration permits dual registration. The permission of DIGEMAR must also be obtained. A vessel which is ‘flagged out’ from Panama remains subject to Panamanian fiscal and legal obligations. Ownership title or mortgages may not be recorded on the foreign register on penalty of annulment of the Panamanian primary registration.

Special registration

21.14 The facility of short (three months) or ‘single voyage’ registration is available in Panama, which can be extremely effective for a ship-owner requiring short-term solutions for a particular project. Special (lower) fees and requirements are applicable for this type of registration.

Trading limits

21.15 Vessels registered in Panama are not subject to any trading limits.

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Manning requirements

21.16 The interpretation and implementation of manning requirements is the responsibility of SEGUMAR. Panama has instituted a number of innovative standards in safe manning that have become widely emanated and accepted. Panama was one of the first administrations to accept the use of general purpose ratings, bringing down the total manning on some large container ships to 12 crew; to adopt the reduction of one engineering officer and one motorman for vessels designated for unmanned machinery space operations and to exempt vessels over 1,600 GRT from carrying a radio telegraph operator if the vessel’s operations are always carried on within 200 miles of land.

Certificates of competency for officers and ratings

21.17 Every officer serving on board Panamanian registered ships of over 200 gross tons is required to hold a certificate of competency issued by the DIGEMAR permitting the holder to perform the duties corresponding with the position described in such certificate. Alternatively, DIGEMAR will issue endorsement certificates to holders of certificates of competency issued by the national maritime organisations of countries that are included in the International Maritime Organisation STCW White List.4 Distinct from the White/Grey/Black lists published by Port State Control organisations, this White List is a list of IMO Member States which are considered, for the purpose of mutual recognition by other flag States, to comply by giving ‘full and complete effect’ to the minimum competency requirements laid down by the 1995 Amendments to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers.5

Nationality of crew

21.18 According to Article 266 of the Panamanian Labour Code, at least 10% of a vessel’s crew must be Panamanians. However, owing to the difficulty of recruiting a sufficient number of Panamanian seafarers, this is not insisted upon.

Document of safe manning

21.19 Every passenger and cargo vessel of more than 500 GRT registered under the Panamanian flag is required to have on board a minimum safe manning certificate. Such certificates can be obtained on application to SEGUMAR and accompanied by the applicable payment of their fees. An application must include the proposed manning of the vessel in the deck and engine departments, both officers and ratings, showing numbers and grades. It must also contain full particulars of the vessel, its propulsion system and power output, the nature of service and the trading area that might affect the normal

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manning requirements. Once issued, a certificate is valid indefinitely, unless a change of equipment or trading circumstances occurs. It is the responsibility of the ship-owner to notify DIGEMAR if a change of circumstances occurs which might affect the safe manning of a vessel.

Approved classification societies

21.20 The following organisations are recognised by the Panama flag State as approved for the issuance of certificates to Panamanian vessels:6
  • American Bureau of Shipping (ABS)
  • Bureau Veritas (BV)
  • China Classification Society (CCS)
  • CR Classification Society
  • Croatian Register of Shipping
  • DNV GL
  • Dromon Bureau of Shipping
  • Hellenic Register of Shipping (HRS)
  • Indian Register of Shipping
  • Intermaritime Certification Services, S.A.
  • International Naval Survey Bureau
  • International Register of Shipping (Panama) Inc.
  • Isthmus Bureau of Shipping, S.A.
  • Korean Register of Shipping (KRS)
  • Lloyd’s Register of Shipping (LR)
  • Macosnar Corporation
  • National Shipping Adjuster Inc.
  • Nippon Kaiji Kyokai (NKK)
  • Overseas Marine Certification Services, Inc.
  • Panama Maritime Documentation Services, Inc.
  • Panama Shipping Registrar Inc.
  • Phoenix Register of Shipping
  • Polski Rejestr Statkow (PRS)
  • Qualitas Register of Shipping
  • Registro Italiano Navale (RINA Services S.p.A)
  • Russian Maritime Register of Shipping
  • Tűrk Loydu


21.21 A non-resident Panamanian company is not liable to pay any income or other taxes in Panama, apart from the annual government corporate tax.

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Double tax treaties

21.22 The Republic of Panama has signed treaties to prevent double taxation with: Barbados, Czech Republic, France, Ireland, Israel, Italy, Luxemburg, Mexico, Netherlands, Portugal, Qatar, Singapore, South Korea, Spain, United Arab Emirates and the UK; as well as tax information exchange treaties with Canada, Denmark, Faroe Islands, Finland, Greenland, Iceland, Japan, Norway, Sweden and the USA.

Procedure for registration

Provisional registration

21.23 An application for a provisional navigation licence (patente provisional de navegación) can be made to DIGEMAR through a Panamanian law firm, to be issued either at a Panamanian consulate or in Panama. It must contain particulars of the vessel, her owners, former registry, her IMO number, classification society, the name of the law firm in Panama appointed as legal representative of the vessel and the authority responsible for radio accounts. Specimen forms are provided within Appendix XI. The application must be accompanied by the following documents:
  • (1) notice of the name proposed for the vessel;
  • (2) a power of attorney from the owner in favour of the law firm handling the registration and being appointed as legal representative for the vessel;
  • (3) a deletion or cancellation certificate from any previous registry;
  • (4) evidence of title in the form of a builder’s certificate in the case of a newbuilding, or a bill of sale in other cases. In either case, an original and two certified copies are required, all of which should be notarially attested and legalised. The builder’s certificate or bill of sale must either be endorsed with the new owner’s acceptance, or a separate document prepared containing such acceptance. Where no change of ownership has occurred prior to provisional registration under the Panamanian flag, a certified true copy of the previous certificate of registry will suffice; and
  • (5) safety certificates carried by the vessel in order to comply with the relevant international Conventions;
21.24 On receipt of the required information and payment of the prescribed fees, DIGEMAR will authorise the issue of a provisional patente entitling the vessel to fly the Panamanian flag. The provisional patente may be issued by DIGEMAR to the vessel’s lawyers in Panama or through a Panamanian consulate. It should be noted that a provisional patente is not a document of title, as title is only capable of registration when the relevant documents are recorded in the Public Registry in Panama City. As a result, no mortgages may be registered until an owner’s title has been recorded. To overcome this problem, Law No. 14 of 1980, as amended by Law No. 43 of 1984 and by Law No. 55 of 2008, introduced a system whereby title documents and mortgages can be preliminarily recorded in Panama or through one of the principal Panamanian consulates abroad. A preliminary recording by a consul has the same validity as a final recording in the Public Registry, except that the registration is valid for only six months. This period gives an owner sufficient time to complete protocolisation and registration in Panama.

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Validity of the provisional registration and extension

21.25 A provisional patente is valid for six months. If an owner is unable to deliver to DIGEMAR within the six months all necessary documents leading to permanent registration, a three-month extension may be granted on payment of a fixed penalty and a monthly fee.

Permanent registration

21.26 The issue of a permanent patente will be authorised by DIGEMAR when the following documents are delivered to the Bureau:
  • (1) the original builder’s certificate, bill of sale or other document of title, having been received in Panama by the lawyers acting as resident agent for the vessel and translated into Spanish (if necessary), protocolised before a Panamanian notary and registered in the Public Registry in Panama City;
  • (2) a deletion or cancellation certificate from the vessel’s former registry, notarially attested and legalised;
  • (3) a power of attorney in favour of lawyers in Panama City appointing them as resident agents in respect of the vessel, notarially attested and legalised;
  • (4) a tonnage measurement certificate issued by an approved classification society on behalf of the Panamanian Government;
  • (5) safety certificate issued by an approved classification society on behalf of the Panamanian Government and submitted to the Shipping Bureau;
  • (6) an application for a permanent radio licence.

A permanent patente is valid for four years in the case of a merchant vessel and two years in the case of a yacht.

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