Cayman
is well-developed as an international
financial centre. For 25 years the Government
has welcomed offshore business, and has
created a world-standard regulatory structure
to avoid money-laundering and other criminal
activity. The Cayman Islands has the world's
largest offshore banking sector, and is
second only to Bermuda as a captive insurance
centre. Mutual funds have been a more
recent success story, assisted by the
establishment of a stock exchange. Trust
management has always been a significant
activity. The islands also offer a shipping
registry. During 2003 and 2004, China's
explosive entry into world markets saw
the Cayman Islands emerge as one of the
primary routes for financial flows into
and out of the Chinese mainland.
During
2003 the Cayman government battled to
avoid inclusion in the scope of the EU's
Savings Tax Directive, but in the end
was forced to give in by the UK Treasury,
and applyied the information exchange
model under the Directive from 1st July,
2005. This means that information about
interest on savings paid to citizens of
European member states is being forwarded
to the tax authorities of the member state
in question. The Cayman Islands authorities
have put a brave face on this development,
which they tried hard to avoid.
Most
sectors of the Cayman Islands financial
services industry had a good year in 2004
despite hurricane Ivan. CIMA Chairman
Mr. Timothy Ridley observed that: “We
are very encouraged to see the impressive
growth of the banking and insurance sectors
of international business in 2004, despite
the unforeseen burdens imposed by hurricane
Ivan. Our service providers and their
client base remain committed to the jurisdiction
as evidenced by the strong licensing and
registration activity in the final quarter.”
CIMA's
report for 2004/2005 showed continuing
growth in the jurisdiction's offshore
business sectors, with rapid growth of
securitization business being one of the
most marked features.
This
section of the 
site describes the most important types
of offshore business activity carried
out from the Cayman Islands.
Cayman
Islands Investment Fund Management
The Cayman Islands are now one of the
world's leading fund management centres
due to the welcoming regime, well-constructed
legislation, good reputation, and the
recent opening of the Stock Exchange,
whose regime is particularly well-suited
to mutual funds.
Under
the Mutual Fund Law 1996, investment or
mutual funds with more than 15 members
must be individually licensed, or must
be administered by licensed mutual fund
administrators. Licenses are issued by
the Governor in Executive Council ('ExCo')
after scrutiny of the application by the
Monetary Authority.
In
November, 2003, CIMA introduced new mutual
fund regulations in order to make funds
domiciled in the jurisdiction more attractive
to Japanese fund distributors. Legal experts
explained that the changes were deemed
necessary, as although the Japan Securities
Dealer's Association had not objected
to the distribution of Cayman-registered
funds, the guidelines for the selection
of foreign unit trusts were vague with
regard to the required standards for foreign
regulatory regimes, meaning that some
Japanese fund distributors had opted not
to take the risk.
However,
CIMA included a clause in the new regulations
exempting existing Cayman funds registered
in Japan from the obligation to adopt
the more stringent rules if the fund manager
does not see the need.
During
the year to the end of June 2007, the
number of active mutual funds regulated
by CIMA grew to 8,972 funds from 7,845
funds.
See
Law of Offshore
for more details of the licensing and
regulatory process and Offshore
Legal and Tax Regimes for details
of fees payable.
In
the early years of the new millennium,
the Cayman Islands became the jurisdiction
of choice for the registration of hedge
funds. A record number of new hedge funds
was created in the Cayman Islands during
the first six months of 2005, despite
an overall slowdown in the inflow of capital
to hedge funds. More than 80 percent of
the world's hedge funds are registered
with the Cayman Islands Monetary Authority
(CIMA), which reported that the first
half of 2005 saw the total number of registered
funds grow from 5,932 to 6,527.
The
Cayman Islands Monetary Authority (CIMA)
announced in mid-2006 that the islands'
hedge fund sector is continuing to boom,
with an additional 665 funds having registered
in the first five months of the year.
The
SEC's new rules for hedge fund registration
in the US have done nothing to lessen
the attractions of 'offshore' as an alternative
domicile. Many US fund managers now choose
to register their funds in Cayman, with
actual management sub-contracted to US
or UK firms.
The
Cayman Islands Stock Exchange opened in
July 1997 under the Stock Exchange Company
Law 1996, specifically targeted at mutual
funds and specialised debt securities
(SPVs). Funds of funds and umbrella funds
are both accepted, and there are no restrictions
on investment policies. Funds can be established
locally, or in a recognised jurisdiction,
meaning the EU, the USA, Japan, Switzerland,
Canada, and a number of other IOFCs. Listing
takes as little as 1-2 weeks. See Law
of Offshore for details of listing
requirements.
By
mid-2007, the CSX had more than 1,400
listings and a market capitalisation of
more than $123 billion.
The
Securities Investment Business Law, 2001
aims to regulate the business of securities
investment in the Cayman Islands and provide
an appropriate structure for the regulation
of securities brokers, including market
makers, arrangers, investment advisors
and investment managers. The fundamental
objective of the law is to define activity
that requires a licence and then to ensure
that such activity is undertaken by fit
and proper persons in accordance with
accepted supervisory standards of conduct
for securities investment business. The
Cayman Islands Monetary Authority (CIMA)
is directly responsible for the licensing,
supervision and enforcement of such licences.
The
Securities Investment Business Law, 2002
(Commencement) Order 2002 came into force
from August 14th 2002. It obliges anyone
carrying on SIB to examine their status
under the Law and consider whether they
should apply for one of the exemptions
under the Law, or potentially be subject
to its licensing requirements.
With
effect from 4 March 2004, the UK's Board
of the Inland Revenue designated the Cayman
Islands Stock Exchange as a ‘recognised
stock exchange’ under section 841 of ICTA.
The term ‘recognised stock exchange’ occurs
throughout the Taxes Acts and in various
tax regulations. For example it is used
in the definition of a close company in
section 415 ICTA 1988, and in the definition
of investments which may be held in PEPs
and ISAs. The term is often used in the
phrase ‘listed on a recognised stock exchange’
or in similar or related expressions.
Firms listed on the CSX will now be able
to take advantage of the 'quoted eurobond
exemption'. As a result, interest paid
on securities listed on the Cayman Islands
Stock Exchange can now be paid without
deduction of UK tax. Similarly, securities
listed on the CSX are now regarded as
'qualifying investments', allowing them
to be held directly in Personal Equity
Plans (PEPs) and Individual Savings Accounts
(ISAs).
In
March, 2006, offshore law firm Walkers
says that collateralized debt obligations
(CDOs) were being created at a record
pace in the Cayman Islands, with $125
bn of transactions in 2005.
Walkers
says that more than 270 CDO transactions
were established in the Cayman Islands
in 2005; the number of CDOs issued in
the Cayman Islands has grown more than
100 percent in the previous two years.
"The
first Cayman CDO was issued in 1994, however
current stability in the corporate marketplace
combined with the lackluster performance
of debt and equity markets worldwide is
translating into a surge in demand for
CDOs of all types," Ian Ashman, a Partner
in Walkers' Structured Finance group,
said. "This type of vehicle is being used
in a wider range of transactions including
high volume commercial real estate deals
and middle market loans."
A
recent report by Moody's Investors Services
predicts that the record-breaking 73 percent
increase seen in CDO issuance worldwide
in 2005 should translate into a strong
first quarter in 2006. Walkers has seen
increased activity in their CDO work to
support this analysis.
One
of the drivers for this growth is that
CDOs are being used in more ways than
ever before: as asset-backed securities,
commercial- and residential-backed securities,
balance sheet CDOs backed by pools of
commercial loans, high-yield bonds, leveraged
loans, and repackaged CDOs.
"There
weren't a lot of corporate credit roller
coasters in 2005, so CDOs performed well,
diversified, and became increasingly attractive
to investors and bankers," David Egglishaw,
Managing Director of Walkers SPV, a licensed
trust company wholly-owned by Walkers,
said. "And this seems to be just the tip
of the iceberg. The markets are much more
transparent and liquid and we expect to
see CDOs applied in increasingly innovative
ways in 2006."
The
Cayman Islands provide CDOs with a tax
neutral jurisdiction, a sophisticated
financial infrastructure that includes
major banks and accounting firms, and
therefore the ability to achieve measurable
savings which, in turn, are passed along
to investors.
Cayman
legal firms were indeed in great demand
from the issuers of structured finance
securities during the first six months
of 2006, underlining the Cayman Island's
pre-eminence as a jurisdiction of choice
for special purpose vehicles (SPVs) used
in securitisation transactions.
According
to UK data provider FactSet Global Filings,
leading Cayman Islands law firms Maples
and Calder and Walkers gave legal advice
on 147 asset-backed securitisation (ABS)
deals between January and June 2006.
Maples
gave advice on a total of 111 deals and
Walkers on a further 36 deals, while smaller
contributions from Mourant du Feu & Jeune
and Ogier pushed the total number higher
still. This compares with the combined
total of 92 from the three main Irish
law firms of A&L Goodbody, Matheson Ormsby
Prentice and McCann Fitzgerald.
The
process of asset securitisation involves
the sale of income-generating financial
assets (such as loans, trade receivables
and leases) by a company to a special
purpose vehicle. The SPV, which might
be a trust or a company, finances the
purchase of these assets by the issue
of bonds, which are secured by those assets.
Cayman
law firms were also dominant in advising
on collateralised deals during the first
half of the year with Maples and Walkers
advising on a combined 143 transactions
compared, compared with 77 from the main
Irish firms.
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Cayman
Islands Banking
Cayman banks must be licensed under the
Banks and Trust Companies Law 1995 as
amended in 2003. The astonishing Cayman
Islands banking industry has 340 such
licensed banks, of which about 30 hold
Class A licenses permitting local and
offshore business activity, while the
remainder hold Class B licenses, permitting
only offshore business - a local office
is allowed, but only very limited transactions
can be carried out with Cayman Islands
residents. Banks do not need to be incorporated
locally: a foreign bank can register as
a foreign
company and then obtain a license.
For further details of licensing requirements
and procedures and fees payable see Law
of Offshore and Offshore
Legal and Tax Regimes.
The
assets of Cayman banks exceeded US$1.7
trillion in 2007. A very wide range of
services is offered: the 80,000 offshore
companies registered in Cayman include
many treasury management or investment
management subsidiaries of multinationals
taking advantage of the excellent banking
environment and absence of taxation. Evidently,
private banking is a major component of
the industry: asset protection rather
than tax avoidance as such is the driving
force, so that the stability of Cayman
alongside stringent banking secrecy and
its sophisticated investment environment
are very attractive to wealthy individuals,
particularly those from the US where Cayman
has a very good reputation.
In
2005 the total number of banking and trust
licences declined by 22 to 312, due mainly
to consolidations worldwide, however the
assets and liabilities of licensees increased.
Total international assets booked through
banks in the Cayman Islands stood at US$1,265
billion at 30 June and liabilities totalled
US$1,250 billion at the same date.
Cayman
Islands' banks are supervised by the Cayman
Islands Monetary Authority (CIMA), which
concentrates on 110 banks for which Cayman
is the home-country supervisor. CIMA recently
extended its bank inspection programme
to on-shore subsidiaries of Cayman banks.
Cayman
signed a Memorandum of Understanding on
cross-border banking supervision with
Brazil in 1999, and intends to create
a network of such agreements with all
the countries whose banking supervisors
evince interest in Cayman's banking sector.
Following
KPMG's independent report to the UK Government
on the regulatory regime in the Cayman
Islands and other offshore financial centres
in the autumn of 2000, CIMA made a ruling
on private 'shell' banks that have no
effective supervision because they are
not units of established international
banks, subject to stringent regulation
in their home jurisdictions. Such mainly
US banks have no physical presence in
the Cayman Islands.
In
2000, the Cayman Islands introduced additional
due diligence procedures for banks when
they were required to comply with fresh
Know Your Customer regulations. The original
deadline of 31 December 2002 for the provision
of information about customers to the
authorities was extended, and the new
rules came into force in March 2004.
The
due diligence rules require both new and
long-standing account holders in the jurisdiction
to provide proof of identity and physical
address, in addition to an explanation
of their banking activities. The rules
have provoked criticism from some quarters,
particularly from those who have banked
in the Caymans for many years, who argue
that they are intrusive and unnecessary.
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Cayman
Islands Trust Management
Trust Management has been a major activity
in the Cayman Islands for 30 years or
more, and trust assets in Cayman now equal
or exceed banking assets. Originally the
trust was used primarily by wealthy individuals
from the major common law countries, but
it is now accepted as a major technique
of asset protection in all parts of the
world. Over the last 25 years the Cayman
Islands, perhaps more than some other
jurisdictions, have extended and adapted
their trust laws to accommodate this wider
market, which is not necessarily interested
so much just in tax avoidance, but also
in the efficient management of wealth
in a more general sense. See Law
of Offshore for a fuller treatment
of trust law in Cayman.
There
is a large and sophisticated community
of professional advisers on trust matters
in Cayman. Individuals can provide trust
services in the Cayman Islands without
registration, but companies offering trust
services must be licensed under the Banks
and Trust Companies Law 1995. Foreign
or Cayman-resident companies may obtain
licenses. These are issued by the Governor,
after the Monetary Authority has accepted
an application giving comprehensive information
about the applicant.
A
licensed trust company may be 'restricted'
or 'unrestricted'. 'Restricted' companies
require less capital, but are more strictly
controlled. See Law
of Offshore and Offshore
Legal and Tax Regimes for further
details of the licensing regime for trusts,
and fees payable.
Private
trustee companies have recently become
popular. In this arrangement, the trust
itself remains uncluttered by control
arrangements, which are exercised by the
private trustee company, which in turn
can be administered by a licensed trust
company. This form is particularly suited
to the larger type of family trusts with
multiple beneficiaries and objects.
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Cayman
Islands Insurance
See Offshore Business
Review – Insurance for a more
general treatment of captive insurance
companies.
The Cayman Islands insurance sector is
regulated under the Insurance Law 1979
as amended, most recently in 2004. Class
A insurance licenses cover domestic insurance
in Cayman itself; Class B licenses cover
Cayman or (registered) foreign companies
conducting external business; restricted
Class B licenses are for captives. Applications
for licenses are made to the Cayman Islands
Monetary Authority (CIMA). See Law
of Offshore and Offshore
Legal and Tax Regimes for further
details of the licensing regime, minimum
capital requirements and fee levels.
Legislation
in 1998 introduced a Segregated Portfolio
Company Law. The SPC is an exempted company
which may create one or more segregated
portfolios in order to segregate the assets
and liabilities of the company held within
or on behalf of the portfolio from the
assets and liabilities of other portfolios.
As originally passed, SPCs were available
only to certain types of insurance company,
but in 2002 amendments extended the provisions
relating to segregated portfolios to any
exempted company. In essence, the new
law provided that any new company may
apply to be registered as a segregated
portfolio company. A segregated portfolio
company must pay additional fees and must
provide notice to the Registrar of the
names of all segregated portfolio accounts
created.
The
changes now in process will allow an existing
company to convert into an SPC, although
a number of criteria will need to be met,
including the written consent of each
creditor of the company and the approval
of the Cayman Islands Monetary Authority
(CIMA). An SPC will also be able to create
separate portfolios by reference to a
series of shares, as well as by reference
to separate classes of shares.
An improvement to the current SPC structure,
adopted from Guernsey legislation, will
ensure that there will now be no ‘flow
over’ from an insolvent cell to general
assets. A key change for mutual fund issuers
is a provision that secured creditors
will now be able to enforce their security
against a segregated portfolio, despite
the existence of a receivership order
against that portfolio. This will ensure
that a segregated portfolio will be acceptable
to – and will be rated by – the rating
agencies in the same manner as an exempt
company.
The
Cayman Islands has the second-largest
captive insurance community in the world,
after Bermuda. The year 2000 saw 48 new
captives set up in the Caymans, bringing
the total to 535. By the end of 2002 Cayman
had 642 captives, having beaten Bermuda
into second place for new formations in
the year with 97 new companies. A total
of 83 new captives were licensed during
2003, bringing the total number of active
captives to 644 at December 31st writing
US$4.98 billion in premium and reporting
US$19.35 billion in assets. Additionally,
39 new segregated portfolios were established
within the segregated portfolio companies.
At December 31, there were 79 Segregated
Portfolio Companies licensed with a total
of 350 Segregated Portfolios.
Hurricane
Ivan in 2004 damaged the Cayman Islands
in physical terms, but did not halt the
expansion of the insurance sector. According
to CIMA, in the weeks that followed the
devastating hurricane, nine licences were
granted to captive insurance companies,
and the authority also issued an insurance
management licence to Strategic Risk Solutions
(Cayman) Limited.
Brady Young, President of SRS, noted:
“There is a strong demand among current
and prospective captive owners to domicile
their companies in Cayman. As a captive
manager it is important for us to be present
in this domicile.”
The
number of captives increased by 75 to
693 at the end of 2004, a 7% net increase.
Cayman's
captive insurance sector continued to
grow in 2005, with 733 Cayman-licensed
captives active at 31 December, according
to March, 2006, figures from CIMA. Total
assets of the 733 captives active at year
end 2005 amounted to US$26.6 billion.
Premiums written by these entities equalled
US$6.7 billion
North
America was the region of origin and the
location of risk for the vast majority
of licensees. Eighty-eight percent of
licensees (646) were providing cover in
North America, writing premiums amounting
to US$5.6 billion.
This
was followed by the Caribbean and Latin
America, which made up approximately five
percent of total licensees (33) with premiums
amounting to US$132.4 million.
Healthcare
was the primary class of business for
38 percent of Cayman-domiciled captives
in 2005, with US$2.5 billion worth of
premiums written in this class.
Workers
compensation was the primary class of
business for 21 percent of captives (155
licensees). Premiums in this category
totalled US$1.5 billion.
Property
was the third most popular category, with
10 percent of captives (75 companies)
listing it as their primary class of business
and writing US$487.5 million in premiums.
Also
in 2005, the Cayman Islands witnessed
the formation of an open market reinsurer,
Greenlight Re with approximately US$250
million in capital.
"Greenlight
Re is the first Cayman-based global property
and casualty reinsurance company and has
worldwide reach, specializing in custom
tailored reinsurance solutions. We anticipate
that during 2006 interest in utilising
Cayman as a domicile for such vehicles
will continue," observed Mrs Nicol.
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Cayman Islands
Ship Management and Operations
See Offshore Business
Review – Shipping for a more
general treatment of offshore shipping
registries.
The
Cayman Islands operates Registers of Shipping
and Civil Aircraft. George Town is a Port
of British Registry. Over the years, Cayman
has been included in most English merchant
shipping acts, with the result that it
is a Category 1 registry, entitled to
register all classes of vessel.
The
Cayman Islands Shipping Registry administers
Cayman registration, and has a full professional
staff for this purpose. The Registration
of Merchant Ships Law 1991 governs Cayman
registration and lays down fee levels
according to tonnage.
Aircraft
are registered under the (English) Aircraft
Navigation (Overseas Territories) Order
1989. The Civil Aviation Authority of
the Cayman Islands maintains the register.
The UK Civil Aviation Authority has discretion
over Cayman registration, and in practical
terms limits it to private aircraft.
In
2003 the register consisted of 123 ships
(1,000 GRT or over) 2,402,058 GRT, 3,792,094
DWT. By type: bulk 22, cargo 5, chemical
tanker 31, container 2, liquefied gas
1, petroleum tanker 21, refrigerated cargo
35, roll on/roll off 5, specialized tanker
1.
The
new Merchant Shipping Law of 1997 together
with its amendments (the "New Law")
was commenced in July 1999 to revise,
streamline and update the pre-existing
law. The New Law is based mainly on the
United Kingdom ("UK") Merchant
Shipping Act, 1995, the UK Aviation and
Maritime Security Act, 1990 and the UK
Merchant Shipping and Maritime Security
Act, 1997. It also embraces up-to-date
convention requirements together with
a number of innovations that address some
of the specific needs of the Cayman Islands.
These include: wider ownership, extended
demise charter, enhanced mortgagee protection,
registration and mortgage of ships under
construction, mandatory minimum insurance,
anti-piracy measures and clearer exercise
of due diligence in the registration,
deletion and representation of ships.
The provisions of a number of ILO Conventions
have also been incorporated, covering
the engagement and welfare of seafarers,
recruitment and placement of seafarers,
regulation on hours of work and rest,
and living and working conditions of seafarers.
A
similar revision exercise has taken place
with the Merchant Shipping (Marine Pollution)
Law. This Law places all applicable aspects
of marine pollution into one comprehensive
and up-to-date body of law. It incorporates
relevant aspects of UNCLOS, MARPOL, the
Intervention Convention, OPRC 90, the
London Convention on dumping of wastes
(including its Protocol of 1996) and the
Hazardous and Noxious Substances Convention.
Some applications that have a broader
reach than strict pollution issues have
been included in the Merchant Shipping
Law. Examples include the Civil Liability
Convention and the Fund Convention.
The
third body of principal maritime legislation
is the Admiralty Jurisdiction Law, which
came into effect in 2003. It is based
on the UK Supreme Court Act, 1981 and
incorporates the Arrest Convention of
1952. It operates as part of the Cayman
Islands Grand Court Law and Rules.
In
July 2004 it was announced that the Cayman
Islands' shipping registry is now fully
compliant with the International Maritime
Organisation’s new International Ship
and Port Facility Security Code. These
international maritime security measures
entered into force on July 1, 2004 and
are designed to enhance maritime security
on board ships and at ship/port interface
areas. They were adopted by a Conference
on Maritime Security, part of the United
Nations, in December 2002. The new chapter
applies to passenger ships and cargo ships
of 500 gross tonnage and above, including
high speed craft, mobile offshore drilling
units and port facilities serving such
ships engaged on international voyages.
In
2005 a Maritime Authority Law was passed,
creating the Maritime Authority of the
Cayman Islands (MACI), a body which incorporates
the Cayman Islands Shipping Registry,
Cayman’s Port State Control and Marine
Casualty Investigation arms into one entity.
In
August, 2005, Cayman Islands Governor,
H.E.Bruce Dinwiddy, appointed six new
board members to MACI, including Sharon
Roulstone, an Attorney-at-Law and a Partner
with Turner & Roulstone, who was appointed
Chairman. The post of Deputy Chairman
was filled by Sydney Coleman, CEO of Paget
Brown Trust Company Ltd since 1983 and
a founding member of the Shipping Sector
Consultative Committee. Joel Walton, JP
was appointed in May 2004 as Chief Executive
Officer (Designate) and Director of the
Cayman Islands Shipping Registry.
Other
board appointees included: Woodward Terry,
head of law firm Woodward Terry &
Company and a founding member of the Shipping
Sector Consultative Committee; Donovan
Ebanks MBE, Deputy Chief Secretary in
the Portfolio of Internal and External
Affairs and Chairman of the National Hurricane
Committee; Andrew Eden, former president
and an active member of the Cayman Islands
Seafarers’ Association; and Errol
Bush MBE, former Director of the Port
Authority. A seventh Director with international
maritime experience is to be appointed
in due course.
Mr
Dinwiddy commented: “The selection of
this board was quite challenging among
the very distinguished and qualified persons
being considered. But I am confident we
have brought together a very competent
and well-rounded group of individuals
to form the MACI Board for the next two
years. I wish them every success as they
chart the way forward, firmly integrating
MACI as a key constituent of the Cayman
Islands international financial services
sector."
In
2007, Cayman maritime legislation was
amended with the aim of improving the
services provided by the CISR. The amendments,
which were welcomed by MACI, included
changes to the Merchant Shipping Law (2005
Revision) or MSL 2005, and the Maritime
Authority of the Cayman Islands Law, 2005,
(MACI 2005). Under the revisions, the
range of countries in which a person or
other entity may be eligible to own a
Cayman Islands ship has been extended
by including those countries which are
currently listed under the Third Schedule
to the Cayman Islands Money Laundering
Regulations. Ship-owning entities in those
countries are now able to register ships
in the Cayman Islands. Prior to the recent
amendment, qualifying countries only included
the 25 European Union countries and their
50-plus overseas dependencies, countries
and territories. Two additional Ports
of Registry (The Creek and Bloody Bay)
were also added to that of George Town.
Other
amendments to MSL 2005 included the introduction
of updated terminology with respect to
UK Overseas Territories and references
to seafarers; the revision of existing
provisions regarding seafarers' wages
to maintain the appropriate level of protection
under international requirements, ensuring
that Cayman continues to meet its international
obligations; and the introduction of provisions
to ensure that the Cayman Islands are
able to take full advantage of emerging
international requirements regarding the
levels of compensation available to the
Islands in the event of a ship-generated
major oil pollution incident.
CEO
of MACI and Director of the CISR, Joel
Walton, commented: "All of these
changes will allow MACI to operate in
a more efficient and effective manner
while continuing to give Cayman's shipping
sector a competitive edge globally."
In
2007, the United States Coast Guard (USCG)
awarded the Cayman Islands Qualship 21
Status, a maritime quality benchmark which
currently only about 10% of foreign ships
entering US waters meet.
Qualship
21 is the USCG’s matrix system of
extending recognition to “foreign”
ships, which fly the Flag of a state which
has demonstrated a good safety and pollution
prevention record with respect to its
ships. Ships in the Qualship 21 system
are required to undergo significantly
less Port State Control inspections by
the USCG whilst in US waters.
Essentially,
the Qualship 21 system “rewards”
good ships thereby contributing to the
elimination of substandard ships.
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