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       Newsletter   



An Introduction To The Hong Kong Basic Law
Stay of Proceedings - Application of Warsaw Convention, Choice of Law and Forum Considerations
Ship Finance: Financing of Hong Kong Flag Vessels
Security for Costs
Changes to the HK Arbitration Rules
Establishment of Trading Offices in Shanghai

Ship Finance:
Financing of Hong Kong Flag Vessels
Ownership Requirements
*Registration is voluntary, and only required if
-the ship intends to leave Hong Kong waters; or,
-a mortgage is to be registered on the ship
*A vessel is registrable in Hong Kong, when
-a "qualified person" either:
(a)owns a majority interest in the ship; or
(b)operates the ship under a demise charterparty (if registration is by virtue of (b) above, registration will cease upon termination of the demise charterparty).
-not registered elsewhere
-has a representative person appointed in Hong Kong in relation to the ship
*A qualified person is:
-an individual holding a valid HKID card and ordinarily resident in HK; or,
-a Hong Kong incorporated company; or,
-an overseas company with an established place of business in Hong Kong and registered under Part XI of the Hong Kong Companies Ordinance
Mortgage Registration
*A mortgage may be created as soon as the ship is provisionally or permanently registered
*The mortgage must be in the form prescribed by the Hong Kong Marine Department
*An individual, joint mortgagees, local or foreign bodies corporate may be entered in the Register as mortgagees
*Mortgagees need not be "qualified persons"
*A mortgage is executed under seal and witnessed. In the case of a company, it should also be in accordance with its articles of association
Mortgage Status
*Priority of the mortgage depends on date and time of presentation and acceptance for registration, not according to the date of the actual mortgage instrument
*The mortgage should also be registered with the Companies Registry otherwise it would be void against a liquidator of the owning company
*Mortgage remains on the Register until the mortgagee submits a specified form of memorandum of discharge and the original mortgage instrument with the Registry
*The mortgage remains on the Register notwithstanding change of ownership or whether the loan under which the mortgage was created has been repaid
Mortgage Enforcement
*Upon an event of default, the mortgagee may apply to the Hong Kong court for recourse against the mortgagor.

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