Laws Expected to Boost Liberian Registry Growth

Thursday, April 11, 2002
The Liberian Registry has shown steady growth during 2001. During 2001 the registry recorded a net gain of 1.2 million gt. Also during 2001, LISCR, the US company which manages the registry, reported a steady uptake of its new SEA electronic seafarers application service, which speeds documentation and improves security. At the end of the year, the Liberian Government approved major amendments to maritime and corporate laws, which will improve the service offered to registry clients and underpin further growth. The changes, made after extensive consultation with core registry users, combine long-outstanding revisions to existing Liberian law with the introduction of corporate vehicles designed to reflect the needs of a changing market, particularly in relation to corporate structures.

On the maritime side the changes in the law and in regulations implement international requirements into national law, reflect the independent status of the Bureau of Maritime Affairs - both matters which in practice have already happened - and provide the facility for the registry to introduce new services in relation to ship registration and mortgage recording.

The amendments exploit changes in technology permitting registration of a ship and recordation of a mortgage to be made remotely, and for the record - in the legislation referred to as the index - to be maintained and reproduced electronically. The status of Liberia as the location of the index, and of any documents registered under the Maritime Law, is underlined, while permitting duplicate indices to be maintained in other locations. Of real significance to both ship owners and banks granting mortgages are the provisions for the recordation of a mortgage other than in the location at which the index is physically kept, New York. This will eventually allow mortgages to be recorded in real time anywhere in the world.

In parallel with the changes to maritime law the Legislature has approved the Electronic Transactions Law. This legislation contains the detailed provisions, which establish the status of electronic communications, records, contracts made electronically, the integrity of documents and reproductions and the security of signatures. In relation to international business the Liberian Government has recognized the importance of compliance with the standards of the model UN document on electronic transactions combined with selection of the most secure method of authenticating electronic signatures. Other amendments to the Maritime Law -

* Clarify the noting of mortgage in relation to ships bareboat chartered into Liberia and the status of the preferred mortgage recorded in respect of a vessel which bareboat registers out of Liberia.

* Spell out the circumstances in which corrections to entries in the index or in documents registered in respect of the mortgage may be made.

* Expand the form and the nature of charge or interest that may be given the status of a preferred mortgage.

* Specify when a vessel may be de-registered notwithstanding that a preferred mortgage is still in effect. * Introduce the possibility of recording a mortgage on a vessel under construction.

Asset protection is one of the principal motives for the use of Liberian corporate structures. The Liberian Legislature has enacted legislation with this in mind. Amendments to the Business Corporation Act will give greater flexibility, reduce some formalities, allow re-domiciliation and conversion from and to other legal entities and generally bring the Act up to date with the United State law on which it is based.

Importantly, in reflection of a policy decision, the amendments do not touch the bearer share provisions and there are no plans to do so or to change the non-resident tax status.

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