Shipping investments in Greece

Taking advantage of the country’s know-how and the industry’s flexibility

Greece has been in the eye of a fundamental economic crisis for years, yet the shipping leg of the economy remains active and productive, due to its international nature and link with global economic trends. The Greek maritime sector is a key player in the world’s shipping, with a plethora of specialized staff covering all activities related to the industry, from sophisticated techniques in shipowning to ship supplies and repairs. Professionals rendering high quality services such as brokers, lawyers, accountants et.al., complete a puzzle of skilled and knowledgeable infrastructure that is capable of supporting any scheme in the field.

A typical Greek maritime group has the following structure: There is one shipowning company (usually offshore, although the Greek legal system provides for a special type of shipping company) for each vessel of the group; each shipowning company has a management agreement with the managing company of the Group, which is usually an offshore company established in Greece under this specific privileged regime. The management company is the one that attends to everything related to the vessels’ operation, while the shipowning companies merely receive their hires. To implement proper management, the established company, employs highly skilled personnel, and the experience accumulated over centuries of shipping activity has developed efficient techniques ensuring optimum results.

Investors wishing to place funds in Greek shipping have a variety of alternative ways to do so. We can indicatively (but not exhaustively ) illustrate a few, underscoring that there can always be tailor-made solutions to address specific requirements. Needless to say that shipping is a volatile industry with high market fluctuations, which should be taken into account when one decides to enter. To understand further the volatility of the market, we note that in the last 6 months the vessels values have dropped at least 40% following a continuous drop of the last 16-18 months after high prices that were paid back in 2012-2013.

Purchase and bareboat charter: This is an option that does not require everyday involvement with the industry, as the investors will incorporate a company to acquire a vessel, and then bareboat charter her to a third party. Bareboat charter is a form of chartering where the Owner merely charters the vessel and the charterer is under the duty to man, equip and operate her. This is a recommended placement for investors that do not wish to involve themselves  with shipping directly but wish to take advantage of the profits of the industry. The bareboat charterer shall pay a hire to the Owner and will in turn operate with the object of further gain from exploiting the ship.

Purchase and delegate management: In this alternative, the investors shall, as above, incorporate a company to acquire a vessel, and then will enter into a management agreement with a company established in Greece, as  illustrated above, for the management of the vessel. This pattern requires that the Owners maintain an overview of the situation, as they shall have to cooperate with the managers for vessel’s needs and issues arising.

Purchase and manage: Here investors enter shipping fully: The management company is theirs; they employ staff, they take care through their management company of the vessels’ operation, and they arrange for chartering as well. A well structured mechanism is created to serve the ownership and exploitation of the vessel. This alternative is addressed to investors who are familiar with the industry and keen to assume such responsibilities.

How can above be implemented? One should contact a local lawyer to explore a structure tailor-made to the investor’s needs. Once the outline of a plan is in place, funding should be secured either through own funds (of one or more investors) or bank loan (Banks would fund part of acquisition price). Further, a sale and purchase broker is engaged to target the type of vessel to be purchased. Depending on the plan adopted, the relevant structure should have been elaborated and corresponding action should be assumed (eg in case of bareboat chartering of the vessel, the bareboat charterer should be chosen and a bareboat charter signed, in case of management delegation a management agreement with the preferred Manager needs to be entered into and in case the management of the vessel by the investor has been opted, the relevant setup should be in place).

Shipping offers opportunities but, as any financial activity, has its risks. Anybody wishing to enter, should receive proper expert advise.

This last part, ‘expert advise’, we pride ourselves of being able to provide, professionally, confidentially and with the assurances guaranteed by our experience and our connections, addressing all issues and concerns.

The article was written by Manolis Eglezos, attorney at law, managing partner of Manolis Eglezos and Associates Law Firm, Piraeus, Greece.
eglezos@eglezoslaw.gr
www.eglezoslaw.gr