DENMARK Law and Practice Contributed by: Johannes Grove Nielsen, Camilla Søgaard Hudson, Lars Rosenberg Overby and Malthe Hersom Kløft, Bech-Bruun
Pursuant to the Danish Merchant Shipping Act, a spe - cial section of the ship register has been established under the DAS register. This section is called the ship- building register. Ships that are under construction in Denmark can be registered in the register. The precon - dition is that the ship can be reliably identified and that its tonnage is estimated to be at least 5 GT. There is no obligation to register, and no requirements regarding the nationality of the owner. A request for registration can be made by the owner, which must be confirmed by the ship-builder. The detailed rules on registration in the ship-building register, registration of rights and deletion from the register are essentially the same as for the actual ship registers. Foreign-registered vessels can be bareboat-registered in the DIS, and Danish vessels can be bareboat-regis - tered under certain foreign flags. 1.5 Temporary Registration of Vessels The Merchant Shipping Act provides for the possibil - ity for foreign ships to be registered temporarily in the Danish ship registers under certain circumstances, and for Danish ships to be correspondingly registered in foreign registers. The basic condition is that the ship be bareboat-chartered, and it is thus the char - terer who requests the flag change. The purpose of these rules is to enable the parties to the charterparty to have the nationality of the ship changed temporar - ily, should there be any benefits associated with it. The registration can take place in both the DIS and the DAS, and the ship can be admitted for a period of up to five years. However, this period may be extended by up to one year at a time, at the written request of the charterer. 1.6 Registration of Mortgages The Danish Maritime Authority is the authority respon - sible for the registration of mortgages. Ship mortgages must be registered in the DAS or the DIS. The registration must be done by using the stand - ard forms provided by the Danish Maritime Authority. The owner of the vessel must send the original mort - gage deed to the DIS or the DAS. The pages of the deed must be numbered consecutively and signed by the issuer of the mortgage. A passport or similar
proof of identity is often required. The ship-owner can submit documents in both Danish and English. 1.7 Ship Ownership and Mortgages Registry The Danish Maritime Authority offers public access to preliminary information about vessels, such as owner - ship and mortgages, registered in the DIS or the DAS. The information is not an official copy of the registers, but rather a special database to which the public has access, and the information may therefore differ from the official registers. The database is updated approx - imately once a day. A typical ship loan financing in Denmark involves both debt and equity elements. Debt financing is usually provided based on a percentage of the ship’s value, secured by a first-priority Danish ship mortgage. In the firm’s experience, ship mortgages constitute the most prevalent form of security for debt financing in Denmark. See also 1.6 Registration of Mortgages regarding the registration of ship mortgages. The specialised ship financing institute Danmarks Skibskredit A/S is the only institute located in Den - mark that is allowed to provide financing to the ship - ping industry using covered bonds. While some banks also offer ship financing, the number of Danish banks involved in ship financing has been in decline in recent years, although such financing is still used by smaller shipping companies. 2. Ship Finance and Leasing 2.1 Ship Loan Finance Key terms for loan agreements include the loan amount, interest rate, loan to value, repayment sched - ule, security and financial covenants, with prepayment and default provisions governed by Danish law. Other forms of security include assignment of insurance payouts, earnings, interests, charterparties, guaran - tees and pledges over the shares in the special-pur - pose vehicle that owns the ship. Equity financing usually focuses on ownership struc - ture, capital contributions and profit sharing, typically regulated by a shareholders’ agreement.
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