Cyprus Consults on Who May Own a Ship and on Amending Mortgages

The Deputy Ministry of Shipping opened public consultation on 8 September 2026 on a draft bill entitled the Merchant Shipping (Registration, Sale and Mortgage of Ships) (Amendment) Law of 2026. Comments close on 9 October 2026. The explanatory note that accompanies the draft, dated 9 September 2026, states that obstacles to the registration of ships on the Cyprus register were identified in a number of cases and that a partial amendment of the basic laws was decided on as a result.

The bill amends the Merchant Shipping (Registration, Sale and Mortgage of Ships) Laws of 1963 to 2020, whose basic law is Law 45/1963. The most recent amendment integrated into the consolidated text is Law 186(I)/2020. The draft provides that the basic laws and the new law would be cited together as the Laws of 1963 to 2026.

Who may be registered as the owner of a Cyprus ship

Clause 3 replaces section 5 of the basic laws in full. Three of the changes matter commercially.

• The control test for legal persons established outside the Republic and outside the other member states is widened. It is satisfied where more than fifty per cent of the shares of the legal person are held by Cypriot citizens, citizens of another member state, citizens of the United Kingdom or Switzerland, or citizens of other non member states with which the Republic has reciprocity or mutual recognition arrangements. It is also satisfied where those shares are held by one or more qualifying legal persons, including legal persons established in non member states more than fifty per cent of whose own shares are held, directly or indirectly, by qualifying citizens. As an alternative to the shareholding test, a majority of qualifying directors suffices.
• Eligibility is extended to citizens of the United Kingdom or Switzerland, and to citizens of other non member states with which the Republic has reciprocity or mutual recognition arrangements, as determined from time to time by Notification. A new definition of Notification is added to section 2: a notification issued by the Registering Authority and published in the Official Gazette of the Republic.
• Legal persons established and operating in the Republic are defined by reference to the Companies Law, Cap. 113 and to the Shipping Limited Liability Company (Ν.Ε.Π.Ε.) Law of 2022, in each case with a registered office in the Republic. A new subsection provides that the term includes partnerships.

Ownership by the State of the Republic, by semi government organisations and by local authorities is retained, and registration remains capable of being made subject to conditions imposed under section 14B.

A financing institution as registered owner

The replacement section 5 adds a further category of eligible owner. Shares in a ship may be owned by a financial, banking or other similar institution that provides finance to that ship through a finance lease agreement or a bareboat charter arrangement, provided the agreement contains a purchase option under which, once the option is exercised, the ship will pass into the ownership of a person satisfying the ordinary conditions. Details of the application of that paragraph may be fixed by Notification.

Two new sections support the same financing structures from the charterer's side. Section 15A allows the Registering Authority, on the application of the bareboat charterer or lessee of a Cyprus ship, to issue a certificate in written or electronic form. The application has to be accompanied by a copy of the bareboat charter or lease agreement containing a purchase option under which the ship will pass to that charterer or lessee, who must himself satisfy the ownership conditions in section 5, and by the written consent of the ship's mortgagees. The certificate is not to be issued where the ship is registered in parallel on a foreign register. Section 15B allows the owner or the mortgagee to revoke the consent given for that purpose at any time during the period of the certificate, in which case the certificate ceases to have effect, and the revocation takes effect whether or not the certificate is handed back.

Amendment of a registered mortgage

Clause 30 inserts a new section 38A. A registered mortgage on a ship or on a share in a ship, together with the contract attached to it, may be amended by a document setting out the details of the amendment and signed by or on behalf of the mortgagee and the mortgagor, described in the draft as a Mortgage Amendment Document.

On production of that document the Registering Authority records the amendment on the register, noting that the mortgage has been amended. Amendments are registered in the order in which the documents are produced, and the Registering Authority records the day and the time of registration by memorandum. A Mortgage Amendment Document executed outside the Republic may be lodged with a consular officer of the Republic, who notifies the Registering Authority immediately and transmits the document at the first suitable opportunity. An amendment may be made for any purpose, but it is not registered unless the consent of all other registered mortgagees of the ship, where there are any, is produced.

The mortgage as amended continues to hold the same priority that it held before the amendment was registered, which is what makes the new section usable in a refinancing.

Sanctions as a ground for withdrawal of nationality

Clause 6 replaces section 6A, which governs the power of the Deputy Minister to withdraw the Cypriot nationality of a ship. Two sanctions related grounds are added to the existing ones. The first is where a Cyprus ship is used in a manner that may breach economic sanctions or restrictive measures of the European Union or of the United Nations. The second is where the shipowner is a natural person or a legal entity against which such sanctions or restrictive measures have been imposed.

The procedure is unchanged in shape. The Deputy Minister acts by a decision published in the Official Gazette of the Republic, after one month of notice to any registered mortgagees of the ship. The draft states expressly that deletion from the register does not affect liability for taxes, fees and monetary penalties, seizures, or the punishment of offences on the ship or by persons belonging to it, so far as these relate to the period before deletion, and does not affect the validity of any unsatisfied registered mortgages on the ship.

Registration mechanics

Several further changes go to the practical business of getting a ship onto the register and keeping it there.

• The definition of ship in section 2 is replaced. It covers every kind of vessel used in maritime navigation, whether self propelled or not, and includes barges, platforms, floating installations, structures or constructions, oil drilling and processing rigs and other similar craft as determined from time to time by Notification. Where the relevant Part of the law applies, it also includes a vessel under construction.
• Section 6(1) is replaced so that ships under construction may be registered at any stage of their construction, with whatever particulars are available entered at the time and the remainder entered as soon as they become available and in any event on completion of construction.
• Section 23 is replaced. A provisional certificate has the effect of a certificate of registration for six months, which the Registering Authority may extend by a further three months on payment of the relevant fee, or until a new certificate of registration is issued. The replacement section states that this does not affect the validity of any registered mortgage on the ship and that the priority of such a mortgage is preserved until final registration.
• Parallel registration is tightened. Section 23C is amended so that the relevant certificate issues only if the ship is not already registered in parallel on any other foreign register, and corresponding amendments run through the parallel registration provisions.
• Section 11 is amended so that a bill of sale on a purchase must be certified to the satisfaction of the Registering Authority, and so that a deletion certificate from the previous register is produced where the ship was previously registered elsewhere.
• A new ground for deletion is added where the ship is registered in the Small Craft Register, and Part VIII of the basic laws is deleted.
• Monetary penalties still expressed in pounds are restated in euro, at two thousand euro in the sections that carried one thousand, and at ten thousand euro in section 50, which carried one thousand five hundred.

What this means in practice

Nothing in the bill is law yet, and the consultation is the point at which the text can still be moved. Comments are open until 9 October 2026 through the government consultation platform, and the named consultation officer at the Deputy Ministry of Shipping is identified on the consultation page.

For owners and their advisers the widened control test is the change most likely to alter an existing structure. A group that today cannot satisfy the requirement to trace control to qualifying natural persons may be able to satisfy the shareholding test through qualifying legal persons, or through the majority of directors route, without inserting individuals into the ownership chain. Groups with United Kingdom or Swiss ownership should watch for the Notification, because their eligibility depends on it rather than on the section itself.

For lenders the two provisions worth reading closely are section 38A and the replacement section 23. The ability to amend a registered mortgage without losing priority removes the practice of discharging and re registering security when the underlying facility changes, but it comes with the consent of every other registered mortgagee as a condition, so intercreditor arrangements should anticipate it. The express preservation of mortgage priority during the life of a provisional certificate closes a gap that has to be managed by undertaking at present.

For anyone advising on sanctions exposure, the new grounds in section 6A make sanctions a registry matter and not only a compliance one. A mortgagee's protection is the one month notice and the statement that deletion leaves an unsatisfied registered mortgage intact, both of which should be reflected in facility documentation for Cyprus flagged tonnage.

Questions we are asked

Sources

• Public consultation, Merchant Shipping (Registration, Sale and Mortgage of Ships) (Amendment) Law of 2026, Deputy Ministry of Shipping
• Merchant Shipping (Registration, Sale and Mortgage of Ships) Law of 1963, Law 45/1963, CyLaw index

This article is provided for general information purposes only and does not constitute legal advice.

Klitos Platis

Advocate, Partner

Kleanthous & Platis LLC, Nicosia · Published 10 September 2026