What is Yacht Management?
a. A Yacht Management Company is a shore-based mechanism supporting yacht operations with respect to accounts, technical interventions and compliance with legislative requirements.
b. The support is offered to the yacht owning company, the yacht and the crew by experienced professionals providing complementary knowledge, advice, resources and solutions.
c. A yacht is not merely a valuable floating asset, it is an employer, a machine requiring maintenance, a charter business, an office and a holiday Back to top
What is a Designated Person Ashore (DPA)?
a. In accordance with the International Safety Management (ISM) Code a Designated Person Ashore (DPA) is to be assigned by the Managing Company to ensure the safe operation of each ISM compliant yacht > 500GT.
b. The DPA provides a link between the Managing Company and those employed on board the yacht.
c. The DPA must have direct access to the highest level of management within the Managing Company to ensure adequate resources and shore-based support are allocated to monitor the safety and pollution prevention aspects of the operation of each yacht.
d. The DPA holds a key role in the Management responsibility to implement and maintain the Company’s Safety Management System (SMS).
e. Designated Persons need to be suitably qualified and experienced in vessel operations or management systems and be fully conversant with the company’s safety and environmental protection policies and Safety Management System.
f. In order to maintain the management system efficiently: implementation must be verified; deficiencies must be reported and; those responsible for corrective action must be identified and observed to be taking the appropriate corrective action.
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What is Gross Tonnage (GT)?
a. Gross Tonnage is a volumetric measurement of the yacht’s enclosed spaces.
b. The measurement was originally derived to identify the cargo capacity of a vessel for the purpose of calculating taxation.
c. Gross Tonnage is currently used to determine manning, safety and other statutory requirements.
d. The measurement is governed by an International Maritime Organisation (IMO) Convention and applies to all vessels constructed after July 1982.
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Does my yacht NEED management?
To decide whether or not you need yacht management you should consider the legislation, the logistics and the practical aspects of yacht management:
YACHT MANAGEMENT LEGISLATION
a. Shore-based Management is mandatory for commercially registered and operated yachts of 500 Gross Tonnage (GT) and above.
b. The OWNER, or MANAGER must assume responsibility for the operation of the vessel and all the duties imposed by the International Safety Management (ISM) Code.
c. Subject to a successful audit, a Document of Compliance (DOC) will be issued to the MANAGER by the Flag Administration (or Recognised Organisation) to confirm compliance with the requirements of the ISM Code.
d. All yachts of 500GT and above that are engaged in trade must be operated by a company holding a DOC.
e. Commercially operated yachts below 500GT are required to employ a Safety Management System and implement a clearly-defined Health & Safety Protection Policy. If a Yacht Management Company is not engaged, then the OWNER is accountable for ensuring the yacht is properly maintained, operated by qualified personnel and in full compliance with all relevant legislation.
YACHT MANAGEMENT LOGISTICS:
f. Management of yacht operations is a specialist vocation and likely to be outside the field of knowledge and experience of the OWNER’s office personnel.
g. The yacht is a 24-hour/7-day per week operation, requiring shore-based support personnel to be on call outside of normal office hours.
h. The OWNER’s office may be located in a different time zone to the yacht’s area of navigation.
i. The OWNER’s office may operate in a different language to the yacht personnel.
PRACTICAL ADVANTAGES OF YACHT MANAGEMENT
j. The OWNER can receive professional advice from the yacht manager in order to make informed decisions on all operational matters and reduce the financial impact of ownership.
k. The OWNER can engage a third party COMPANY to take responsibility and protect the ownership from liability.
l. A Yacht Manager can create an additional degree of separation between OWNER and employee to maintain authority and privacy.
m. A Yacht Manager can reduce the workload on the crew and the remove the requirement for intervention by the OWNER.
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What is a Yacht Safety Management System (SMS)?
a. Every yacht managing Company should develop, implement and maintain a Safety Management System (SMS) which includes the following functional requirements:
i. Safety and Environmental Protection Policy
ii. Instructions and Procedures to ensure the safe operation of yachts and protection of the environment in compliance with relevant international and Flag Administration legislation.
iii. Clearly defined levels of authority and lines of communication between and amongst shore and yacht personnel.
iv. Accident reporting procedures.
v. Procedures for identification of non-conformities in the System with provisions for corrective action.
vi. Procedures to prepare for and respond to emergency situations.
vii. Procedures for internal audits and management reviews.
b. The objectives of a Safety Management System are to:
i. Provide for safe practices in yacht operation and a safe working environment.
ii. Establish safeguards against all identified risks.
iii. Improve the safety culture and safety awareness aboard yachts.
iv. Prepare personnel for emergencies related both to safety and environmental protection.
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How much will my yacht cost to operate?
Many have been heard to say that a yacht will cost 10% of its value to operate on an annual basis. This is rarely the case.
Every yacht has a diversity of operational parameters that will govern the costs incurred to run it:
i. Commercial or Private Registration
ii. Number of Crew required for Safe Operation
iii. Areas and limits of Navigation
iv. Fuel Capacity and Consumption
v. Amount of use per annum
vi. Condition and regularity of maintenance
Typically, crew costs (salaries, food, clothing, insurances) equate to between 35% and 50% of the annual operating costs of a yacht in the 40 to 60-metre range. Therefore yachts with a similar crew requirement will have similar outgoings despite their value.
Rosemont Yacht Management can analyse actual historic expenditure from a range of similar yachts to more accurately predict an operating budget.
Significant expenditure is generally incurred at 5-yearly intervals, coinciding with Classification Society Renewal Surveys, Paint Recoating and Maintenance Works. The OWNER should be aware of such fluctuations in annual operating costs from the outset and plan for them in the budgeting forecast.
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What are the common mistakes made in buying a yacht?
This is a very interesting subject from the managers perspective, because we have encountered many yacht owners who have been poorly advised or have purchased yachts through brokers who have been economical with important information on performance, range, functionality and true costs.
We are in a position to assist potential buyers in focussing on the type and size of yacht to suit their proposed use and cruising grounds, as well as their budget, without a commercial advantage in steering them in the most profitable direction.
In advising potential buyers, we need to remain mindful of the following:
• Berth size and draught restrictions of the desired home-base marina;
• Typical proposed use will define the accommodation/cabin numbers, speed, range and capability. Ultimately defining the hull type, construction materials and general appearance;
• Crew costs (inclusive of salaries, clothing, food, insurances, etc..) typically amount to 40 to 45% (for vessels over 35m) of the annual operating costs, so the number of permanent crew a yacht is required to operate with has a big bearing on the overall costs.
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What is the best flag for my yacht?
There are many elements to consider when choosing a flag for a yacht.
The decision on where to register a yacht is dependent on many factors such as:
i. Nationality, and Residency of OWNER
ii. Commercial or Private Operation
iii. Classification Society certification and Construction Approval
iv. Yacht age and condition
v. Proposed Home Berth and Area of Navigation
vi. Owning Company jurisdiction
vii. Existence of Leasing or Financing
viii. Flexibility of Flag Administration with respect to Commercial Activities
ix. Set-up, Annual Administration and Survey Fees
x. Flag Administration Reputation and Rating with Paris MOU
Rosemont Yacht Services and Management personnel will take all these factors into account before advising on the best Flag Administration and type of registration for the efficient and cost effective operation of the yacht.
As well as considering the impact of the flag on the country where the yacht is cruising you should also consider the following:
• Experience and Reputation - the reputation of the register is vitally important.
• Political Stability - how stable is the government and economic environment?
• Political and consular support given by the Flag State.
• Registration Process – does the jurisdiction provide a convenient and speedy registration service?
• Mortgages - security of mortgages registered in the Flag State.
• Registration Fees - how competitive are the fees imposed by the registry?
• Manning - how flexible is the registry in its manning requirements?
• Services - what is the business infrastructure of the Flag State, are there comprehensive, professional support services?
The right answer will depend on the use of the vessel, and the personal circumstances of each owner.
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How do I choose the best country of incorporation for my yacht owning company?
There are many elements to consider when choosing the jurisdiction of a company to own a yacht. The following important matters need to be thought about:
• The nationality of yacht owner (EU or not EU / Less impact in Asia, importation has more impact than nationality);
• The residence of the yacht’s principal user(s) and their guests (more impact within the EU (ie Spain or non EU yacht under TI with EU guests on board);
• The physical characteristics of yacht (age, length and tonnage being particularly important / conformity with any commercial yacht code);
• The existing registration of yacht (if applicable);
• The availability of historical proof of ownership / title documentation for yacht;
• The usage of yacht (i.e. private or for charter);
• VAT or equivalent tax status of the yacht;
• The area of operation and primary homeport/country of use;
• Specific crew and operational considerations.
Once these have been determined the choice of appropriate jurisdiction of the yacht owning company can be narrowed, and costs compared to enable a selection to be made based on the owners personal circumstances.
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What are the benefits of Yacht Administration?
a. Experienced personnel will guide the buyer through the complex process of acquiring a yacht and advise on the corporate structure best suited to the particular yacht ownership to minimise exposure to taxation and maximise the functionality by analysing the following: the yachts VAT status; financing requirements; flag administration and mode of operation; international rules and regulations; requirements for crew welfare and; the nationality and residential status of the yacht Owner.
b. Efficient management of the corporate ownership structure..
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What are the benefits of Yacht Management?
a. Superyachts based far from the owner’s home expose them to challenges with communications, logistics, regulatory compliance and potential fiscal issues. Even if the owner resides in close proximity to their yacht, the administrative resources required to manage the complexities associated with maintenance and repair contracts, insurance, warranty, international maritime legislation and local regulations, crew management and accounting will benefit from specialist, dedicated management.
b. A yacht manager will undertake technical management, day-to-day crew management and day-to-day operational management of the yacht, in close co-ordination with the captain and crew.
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Is there a legal requirement for yacht owners to have Yacht Management?
Yachts that exceed 500 Gross Tons and are engaged in trade (chartering), have an obligation to employ a shore-based mechanism to manage ISM and ISPS (International Safety Management Code/International Ship and Port Facility Security Code) management and MLC (Maritime Labor Convention) compliance.
The shore-based management company is subject to regular audits and inspections from the Flag Administration of the managed yacht, to ensure continued compliance with legislation and regulations. Back to top
What can Rosemont Yacht Services offer useful advice on?
a. Set-up of a corporate structure for ownership.
b. Minimising Tax and VAT exposure.
c. Most suitable Flag Administration under which to register the yacht.
d. Legislation concerning crew employment.
e. Marine finance.
f. Insurance policies for the yacht’s hull and machinery, public liability and crew medical.
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What can Rosemont Yacht Management offer useful advice on?
a. Annual budgeting and expenditure.
b. Crew salaries and employment contracts.
c. Crew management and complaints procedures.
d. Warranty and insurance claims.
e. Maintenance requirements.
f. Shipyard periods and contract negotiation.
g. Flag Administration and Classification Society survey requirements and survey preparation.
h. Safety, security and environmental legislation.
i. New Construction, or Refit & Repair coordination and project management, with particular emphasis on quality, time and costs
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