Timagenis Law Firm SHIPPING

Timagenis Law Firm SHIPPING

CONTENTS Editor-in-chief: Adonis Karatzas (adonik@nb.org) Editorial board: Geena Papantonopoulou (geenap@nb.org) Marina Tsikouri (marinat@nb.org) Advertising managers: Georgia Siakandari (georgias@nb.org) Juliana Berberi (juliber@nb.org) Art Director: Theodoros Mastrogiannis (mastroth@nb.org) Creative Director: Andreas Menounos (andreasm@nb.org) Desktop Publishing Films: Yannis Dedousis (yannisd@nb.org) GREEK LAW DIGEST ISSN 2241-133X www.greeklawdigest.gr NOMIKI BIBLIOTHIKI SA, 2012 COPYRIGHT The content of this Guide is copyright of NOMIKI BIBLIOTHIKI S.A. Copying of part or all of the content of the Guide in any form is prohibited other than that in accordance with the following permission: a) you may copy pages from the Guide for your personal use only, b) you may recopy extracts from the Guide to indi vidual third parties for their personal information, but only if there is acknowledgment to NOMIKI BIBLIOTHIKI S.A. as the copyright owner of the Guide. DISCLAIMER The content of this Guide is intended for information purposes only and should not be treated as legal advice. The publication is necessarily of a general nature; NOMIKI BIBLIOTHIKI S.A. makes no claim as to the comprehensiveness or accuracy of the Information provided; Information is not offered for the purpose of providing individualized legal advice. Professional advice should therefore be sought before any action is undertaken based on this publication. Use of this Guide does not create an attorney-client or any other relationship between the user and NOMIKI BIBLIOTHIKI S.A. or the legal professionals contributing to this publication. 23, Mavromichali Str., 106 80 Athens Greece Tel.: +30 210 3678 800 Fax: +30 210 3678 857 e-mail: info@nb.org http://www.nb.org Useful insights of the Greek Economic Environment...16 Judicial System...33 Basic Aspects of Civil Law...75 Business Entities... 111 Banking System - Finance - Investment... 185 Mergers & Acquisitions... 243 Financial Contracts... 275 Financial Tools... 299 Competition... 313 Industrial & Intellectual Property Rights... 337 Transportation... 355 Insurance... 403 Insolvency - Bankruptcy... 411 Tourism... 425 Technology - Media - Electronic Communications... 433 Energy... 467 Environment... 505 Real estate... 571 Food & Beverage... 589 Life sciences... 597 Consumer protection... 605 Pesronal data... 611 Lottery Games... 619 Sports Law... 625 Employment... 633 Immigration... 653 Exports / Imports/ Customs... 661 Tax... 667 Legal profession in Greece... 703 Related information... 705

TRANSPORTATION

SHIPPING Yiannis G. Timagenis, LL.M(London), M.C.I.Arb., Attorney-at-Law (Piraeus), Solicitor (England and Wales) Partner at TIMAGENIS LAW FIRM 356 The legal framework in Greece is particularly favourable for conducting shipping business and this, together with other factors, has contributed to the worldwide development of Greek Shipping. What are the main shipping activities in Greece? The main shipping activities in Greece primarily include the following: Primary activities: (i) Ship owning, (ii) Ship management, (iii) Chartering ; and Supporting services: (i) Brokering activities (S&P, Chartering), (ii) Marine Suppliers, (iii) Technical Experts, (iv) Ship-buildings/repairs, (v) Legal Services and (vi) Banking Services What are the types of shipowning Companies? The major types of companies that may own vessels can be broadly divided into three categories: Ordinary Greek commercial companies: (i) Company limited by shares (SA - Corporation) - Anonimi Eteria or AE (codified law 2190/1920) mainly used for coastal shipping lines; (ii) Limited Liability Company (Ltd) - Eteria Periorismenis Efthinis or EPE (law 3190/1955) used occasionally for smaller ships; (iii) (General) Partnership - Omorithmi Eteria or OE and Limited Partnership - Eterorithmi Eteria or EE (Greek Civil and Commercial Codes) both of which are very rarely used in shipping; Greek companies specifically designed for shipping activities: (i) Greek Maritime Company - Naftiki Eteria or NE (law 959/1979), designed for all types of ships, though not frequently used; (ii) Special Maritime Enterprise - Eidiki Naftiki Epichirisi or ENE (art.16 of the Ministerial Decisions approving the registration of a vessel under art.13 of legislative decree 2687/1953 and law 959/1979 as amended by law 2987/2002) used for oceangoing vessels; (iii) Shipping Company for Pleasure Yachts - Naftiki Eteria Plion Anapsihis or NEPA- (law 3182/2003) used for professional pleasure yachts; (iv) Investment Company in Oceangoing Vessels - Eteria Ependiseon stin Pontoporo Naftilia or EEPN (law 2823/2000), a type of holding company designed mainly for listing its shares on the Athens Stock Exchange; (v) Partnership for co-ownership of vessels - Simplioktisia (art.10 of the Code of Private Maritime Law), occasionally used for small local vessels; and Foreign companies, which are extensively used for oceangoing vessels flying the Greek flag or a foreign flag, are mainly incorporated in Liberia, the Marshall Islands, Panama, Malta, Cyprus and the British Virgin Islands. Which are the types of Companies most commonly used in practice for ownership of vessels? Company limited by shares (SA) - Anonimi Eteria (AE): commonly used for coastal shipping and the requirements of its incorporation are set out in law 2190/1920. Greek Maritime Company (GMC) - Naftiki Eteria or NE: Incorporation requires a private deed signed by at least two incorporators, which is registered with the Registry of Maritime Companies. By law a GMC has a very specific purpose, i.e. the ownership of vessels under Greek

flag and/or the operation and management of Greek or foreign flag trading vessels (excluding touristic yachts) as well as the acquisition of shares of other Greek Maritime Companies. The minimum share capital required is Euro 5,000 or its equivalent in another currency. In principle, non EU or EEA Member State nationals may become shareholders or acquire rights in rem in the shares of a GMC for less than 50%. The board should consist of at least three directors, holding a term of office of three years (which is renewable). Foreign Companies. Such companies may be incorporated easily and swiftly through their local consuls or company registry directly from Greece, and are widely used in practice. Which is the main type of Ship Management and Ship Broking Company? The typical ship management company in Greece is a foreign company (usually incorporated in Liberia or the Marshall Islands) which establishes a branch office in Greece according to art.25 of law 27/1975 as amended (formerly law 89/1967, hence the commonly used term law 89 Company ). Law 89 Company is possibly one of the most attractive corporate vehicles universally for shipping business mainly because of the straightforward method of establishment, the tax benefits and the stable legal environment under which it operates. The main features of a law 89 Company are as follows: a) the established branch or office may engage exclusively in: the management, operation, chartering, average adjusting, brokerage (of sale and purchase/ shipbuilding/ chartering/ insurance) of vessels under Greek or foreign flag of registered tonnage over 500 tons (but excluding passenger and commercial vessels servicing domestic coastal lines or performing voyages within Greece); the representation of shipowning companies or other enterprises with the same purposes as the above; and the ownership or management of salvage-ships or tugs under foreign flag of any tonnage. b) the permit for establishment is granted by a (joint) Ministerial Decision and is valid for 5 years (which is automatically renewed). c) An application for the permit must be submitted together with the a number of supporting documents, including the company s constitutional documents, a recent goodstanding certificate, an appropriate resolution of its board of directors, documentation relating to the appointment of a legal representative (who could be a Greek or foreign national with special residence permit in Greece) and public filing dues of Euro equivalent to US$ 2,000 which has to be imported in Greece in the name of the company, etc. The permit is usually issued within one month from the filing of the application. d) Within two (2) months from the publication of the ministerial decision approving the establishment, the company must deposit a bank guarantee of US$ 10,000 with the Ministry of Finance. e) The Company must import annually foreign exchange to cover all its payments in Greece of not less than US$ 50,000 and in all other respects, its income/profit is not subject to any income tax. What is the typical legal structure of a shipping business? With the exception of the domestic coastal line shipping companies where all the vessels are usually owned by one company and/or by subsidiaries, the typical form of a shipping group consists of single-vessel shipowning companies managed -almost invariably- by a law 89 Company. This setup provides insulation/protection of the shareholders and the other (sister) single- vessel shipowning companies from liability arising out of the operations of a particular vessel. The aforementioned structure, enhanced by a parent holding company which wholly owns the single-vessel shipowning subsidiaries, is also used in case of raising equity through organised stock exchanges (most often in the US) whereby the parent holding company is the registered issuer of securities. Timagenis Law Firm 357

How is the Registration of Ships effectuated in Greece? Vessels may be registered in Greece both under Greek flag through the Greek ship registries as well as under foreign flag through local consulate and maritime administration authorities. a) Registration under Greek Flag may be effected in two ways: registration pursuant to the Code of Public Maritime Law: all coastal shipping vessels (unlike oceangoing vessels) are registered through this method; and registration of a vessel as a foreign investment, pursuant to art.13 of legislative degree 2687/1953, a method most commonly used for oceangoing vessels. b) General information on legislative decree 2687/1953. Historically, legislative decree 2687/1953 aimed at the protection of foreign investment in Greece and has constitutional force i.e. supersedes ordinary legislation, cannot be repealed or amended by ordinary parliamentary act and, therefore, offers a secure legal framework throughout the vessel s registration and operation under the Greek flag. As a general rule, to effectuate an art.13 registration, more than 50% of the vessel must be beneficially owned by Greek interests. Pursuant to art.13 an approval order is issued (Ministerial Decision) which sets out the terms for the registration of a vessel. Only vessels of more than 1500 gross register tonnage bought by freely available foreign currency may be registered under this decree. Greece does not have an international registry (like Germany, or Scandinavian countries), however, art.13 registration practically serves the same purposes. The Ministerial Decision provides inter alia for the establishment of a special type of company under a flexible regime which is the shipowning company (ENE - see above). Other characteristics of art.13 Ministerial Decisions include the special crew manning requirements, reduced tonnage taxation, as well as automatic deletion of the vessel from the Greek registry (and flag) following the filing of a bank guarantee to the registrar. c) The documents required, along with the application by a prospective shipowner for issuance of the Ministerial Decision, are: (i)a certificate from the Greek Shipowners Union confirming that the legal entity applying for registration is owned by Greek interests in a percentage over 50%; (ii)declaration of appointment of a guarantor (individual or a law 89 Company) who will be liable to the Greek authorities for the payment of the vessel s debts and a matching declaration of acceptance by the guarantor; (iii)declaration under law 1599/1986 of the guarantor confirming that the capital of the shipowner belongs to Greek interests by more than 50%, also providing the names and other personal details of the directors of the shipowning company; (iv)resolutions of board of directors of the shipowning company approving the registration, appointing a guarantor and appointing attorneys; (v) certified copies of the constitutional documents; (vi)recent goodstanding certificate of the shipowning company issued by the appropriate Authority; (vii)receipt of Greek Chamber of Shipping relating to the payment of specified fees; (viii)copies of the international certificate of measurement and certificate of nationality issued under the previous flag of the vessel, or in case of a newbuilding, the interim certificate of measurement issued by the classification society and copies of the relevant pages of the shipbuilding contract relating to the particulars of the parties, purchase price etc.; and (ix) application for obtaining the international call sign and MMSI and the safe manning certificate. The permit is published in due course at the government gazette, however, a shipowning company may avail itself of the benefits of art.13 as of the registration of the vessel. d) Documents to be filed with the shipping registrar prior to the actual registration (for preclearance): fax confirmation from the Ministry responsible for maritime affairs advising the number of the Ministerial Decision; in relation to vessels which have been registered under the flag of a third country (i.e. a non EU country), application for the issuance of the relevant certificate addressed to the Customs Authorities; 358

copies of the international certificate of measurement and certificate of nationality of the vessel s present registry, proving that the sellers are the registered owners of the vessel; declaration under law 1599/1986 of the shipowning company confirming: (a)that the vessel is beneficially owned by Greek nationals by more than 50%; (b)that the vessel has not been registered with any other Greek registry and has not obtained provisional shipping documents; (c)the appointment of a process agent ( antiklitos ), i.e. a person residing at the place of the ships registry responsible for accepting service of documents from the authorities and (d)that there has been no alteration to the vessel s particulars which appear in the aforementioned vessel certificates; declaration under law 1599/1986 of the process agent accepting their appointment and confirming that they cannot be released prior to their replacement; declaration under law 1599/1986 of the shipowning company that new safety and load line certificates will be issued; and customs clearance certificate. e) Documents to be filed with the ship s registrar at the time of registration (i.e. simultaneously with the delivery of the bill of sale by the sellers): The relevant bill of sale duly executed by sellers (and, if required by the law of vessel s previous flag, also accepted by the buyer); The resolutions and power of attorney of the sellers and the buyers; Certificate of goodstanding of the buyers and the sellers. f) Vessels under foreign flags may be registered from Greece through local or correspondent offices (consulates and maritime administration authorities) subject to the respective requirements of each jurisdiction. Typically the flags of Malta, Liberia, Marshall Islands, Panama, Bahamas and Cyprus are preferred. What are the shipowning company s Social Contributions for seamen for a Greek flag vessel? Social insurance of Greek seamen includes mainly pension insurance offered by the Seamen s Pension Fund (NAT) and health insurance offered through Oikos Naftou (ON). The contributions are calculated as percentages of their monthly salaries (9% paid by the seamen and 14% paid by the shipowner). Certain additional contributions increase the seamen s percentage by about 4% and the shipowner s percentage by about 2%. What is the current status on transportation of passengers - Cabotage (article 165 of Code of Public Maritime Law)? Cabotage was the regime restricting local (i.e. within Greek territorial waters) transportation of passengers and goods only to vessels flying the Greek flag. Cabotage has already been abolished for vessels flying the flag of an EU Member-State. A more relaxed regime has been recently established by law 3872/2010 for vessels flying a flag of a third (non-eu) State, and further liberalization is expected. How are Vessels acquired? In the ordinary course of business, a special purpose vehicle (SPV) usually a foreign company (incorporated in the Marshall Islands, Liberia, Malta, Cyprus, Panama, etc.) may acquire a vessel by two methods: either from a ship builder (typically located in Korea, China or Japan) pursuant to a shipbuilding contract under the terms of which the purchase price is payable in 4 to 5 predelivery instalments, usually secured by refund guarantees and a final instalment payable on delivery (newbuilding acquisition); or from another shipping company (seller) typically through a standard Memorandum of Agreement (MOA) under the Norwegian Sale Form 1993- NSF and a bill of sale (second-hand acquisition). Timagenis Law Firm 359

How are vessels financed? Shipping is a capital intensive industry and Greek interest shipowning companies almost without exception require financing to fund their activities. The dominant form of ship finance of Greek interest shipowning companies (typically SPVs) is debt finance and in particular a combination of asset and project finance. In the past decade several shipowning companies of Greek interests were able to raise equity by registering their securities on major international securities exchanges (such as NYSE, NASDAQ, London Stock Exchange main or alternative investment market). In view of the global credit crunch a series of other finance structures have been deployed by shipping companies of Greek interests to finance their activities (including high yield bonds, private equity, mezzanine finance). What is the typical structure of a term-loan ship finance transaction? The most common form of ship finance is a secured bilateral or syndicated loan (in the form of a short or medium term loan, revolving credit facility or less often an overdraft) provided by Greek and/or international financial institutions for the financing or refinancing of: (a) the construction of one or more new vessels; or (b) the acquisition of one or more second-hand vessels. In case of refinancing it is now common to encounter mezzanine finance (usually high yield junior debt) provided typically by international private equity firms or hedge funds. What is the typical documentary structure in a secured term-loan ship finance transaction? The documentation used is, in broad terms, the same used in ship financing internationally and includes the loan agreement and the security documents: a mortgage on the vessel(s), general and specific assignment of earnings, assignment of insurances, bank account pledges, (occasionally) share pledges, guarantees by the holding and/or managing companies and/or all or certain individual shareholders-ultimate beneficial owners. Personal guarantees granted by Greek natural persons warrant careful consideration in order to be enforceable under Greek law and Greek mortgages as to their formal requirements in order to be valid. Currency and/or interest hedging arrangements have become usual practice in ship financing. In case of new buildings and for the stage of the construction, usual pre-delivery security includes the assignment of the borrower s rights under the shipbuilding contract, the refund guarantees, the insurance and any other benefit the borrower (prospective shipowner) may have from the builder. What are the types of a Greek Maritime Mortgage? There are two types of ship mortgage: (a) the mortgage pursuant to articles 195-204 of the Code of Private Maritime Law - law 3816/1958, and (b) the preferred mortgage which is granted pursuant to law 3899/1958 on vessels over 500 tons. In both cases, the mortgage is granted for a specific amount by notarial deed and is registered with the ships registry; it constitutes a title giving the mortgagee a right in rem running in priority over any unsecured claims and constitutes an enforceable title. A preferred mortgage granted over a vessel registered under art.13 of legislative decree 2687/1953 gives the mortgagee the right in rem running in priority over the maritime liens of article 205 of the Greek Code of Private Maritime Law with the exception of the maritime liens which are also provided in article 2 of the Brussels Convention of 1926. A mortgagee may liquidate the mortgaged asset (i.e. the vessel) in a private sale or public auction and, in case of a preferred mortgage, the mortgagee has the right to assume the management of the vessel. What is the taxation regime for Greek shipping? A significant attraction for doing shipping business in Greece is the taxation regime. Greek flag vessels pay a fixed tonnage tax (depending on the tonnage of the ship) without the need to have dealings with local tax authorities regarding their annual income (law 27/1975). Once this tax is paid, no further (income) tax is paid for the profits arising out of the operation of a vessel or capital 360

gains in case of sale of the ship, either by the shipowning company or its shareholders up to the level of individual (natural person) shareholders. This regime is constitutionally protected (art.107 of the Constitution) i.e. it cannot be altered even by act of the Parliament. Transactions relating to a vessel registered under art.13 such as registration, sale and purchase, mortgage, deletion etc. are free from any tax, charge or dues (save for a small fixed due). A similar (but not constitutionally protected) regime applies for foreign flag vessels managed by a law 89 Company. Furthermore, Greek flag vessels owned by Greek legal entities that make calls on U.S. Ports are also exempt from U.S. income tax pursuant to a bilateral treaty between Greece and the U.S. What are in brief the basic elements of the legal framework of Greek Shipping? In a nutshell, the basic components of the legal regime for shipping, which make it an attractive business to be carried out from Greece and has contributed to the worldwide success of Greek Shipping are: Stable and certain business legal environment secured by the Ministerial Decision for the registration of oceangoing ships under the art.13 of legislative decree 2687/1953 which enjoys constitutional protection; Definite and straightforward tax regime set by law 27/1975 constitutionally protected for Greek flag vessels; and The Law 89 Company pursuant to law 89/1967 (already replaced by art.25 of law 27/1975) which sets the platform for one of the most successful legal structutes in the shipping industry. TIMAGENIS LAW FIRM 57, NOTARA STREET 185 35 PIRAEUS Tel.: +30 210 42 20 001 Fax: +30 210 42 21 388 E-mail: office@timagenislaw.com Url: www.timagenislaw.com Languages Greek, English, French, German, Italian and Spanish Number of Lawyers: 18 Contact Gregory J. Timagenis (Senior Partner) Maritime Banking & Finance Mergers & Acquisitions General Corporate & Commercial Litigation & Arbitration Capital Market Offerings Insolvency & Restructuring Derivatives Real estate Foreign investments AREAS OF PRACTICE Privatisations Employment Data protection Corporate tax Competition Environmental law Administrative law Timagenis Law Firm 361