Running a yacht takes a lot of time. Time and money and daily attention. On top of regular maintenance, marina fees and crew salaries, there are various other factors to be considered such as equipment, insurance and the cost of keeping the vessel’s safety systems current to meet regulations.

Most owners do not wish to be responsible for the day-to-day running of their yacht. Nor do they want to be held personally liable for any issues that might occur, such as minor injuries, unfair dismissal claims and the like. And, let’s face it, the truth is that most owners don’t have the time to achieve the expertise required to successfully run a large yacht!

Most yacht owners are primarily concerned the vessel is ready for them when they wish to use it. So, the usual custom is to appoint a limited company as the yacht’s owner and engage professionals as the company directors. Here’s how and why this practice works.

First, using a limited company offers limited liability. A company will have shareholders who own the company but do not own the company’s assets (i.e. the yacht); therefore, they are not held responsible for the company’s liabilities. If the company goes bankrupt, the creditors will receive the assets before the shareholders, who are usually protected against further claims against their own assets. Usually, the shareholders’ liability is limited to the value of their shares.

Depending on the location of the company, responsibilities of the shareholders and applicable laws will vary. (For example, the UK has the Companies Acts.) It is important to consult the local laws and make sure they are abided by in order to avoid any problems down the line. Levels of accounting transparency will also differ greatly, so this might be an influential factor when deciding on a company location.

To establish a company’s existence, it will need to be issued with a Certificate of Incorporation. The Registrar of Companies — this name will vary from country to country; for example, in Spain it is called Registro Mercantil — will provide this once they are happy all the boxes are ticked with regard to compliance with local laws.

Once incorporated, the company can issue shares, after which time the shareholders will appoint directors to manage the company. The directors involved are usually people the owner and captain (or others) have recommended, based on their expertise and previous experience. The directors will report back to the shareholders, and as such, can be fired by them too.

Quite often, a Special Purpose Vehicle (SPV) will be set up especially for the yacht. Many SPVs are set up in an “offshore” jurisdiction to take advantage of the tax neutral status. Offshore companies are usually subjected to less administration and red tape. These companies are often looked after by professionals operating in these jurisdictions who look after a number of yachts. This makes the company cheaper to run, as it doesn’t have to employ a dedicated team; it can use the people already working there. This is a great method to save costs by avoiding paying holidays, pensions, social security and so on. Offshore jurisdictions include the Cayman Islands, Channel Islands, BVIs and Panama, to list a few.

All contracts for the yacht will be held with the SPV, from crew contracts to refit work to surveys. Usually, the company will have its own bank account, which the owner will fund. The authorized personnel will be signatories. They will be responsible for paying all the costs of the yacht once the owner approves; he or she will do this with the captain or manager of the vessel. The level of authorization will vary from yacht to yacht. Some owners like to be more involved, whereas others will step back and let the captain or engineer approve maintenance costs, while allowing the manager to approve any costs relating to ISPS or ISM.

If the vessel charters, the company will also look after this. Another benefit of the owning company setup is VAT implications — the owner might not want to be registered as a VAT trader, therefore the company could look after this aspect.

Of course, incorporation can also offer an important level of anonymity for the owner. This can be an attractive benefit if, for example, the owner is royalty or a celebrity and there are concerns over security of the owner or his or her guests. Having their name appear all over the boat papers is probably not ideal!

In short, running a yacht is a tough business, and if an owner had to be responsible for the nitty-gritty issues, it’s highly unlikely he or she would bother. Having an owning company to deal with the day-to-day of managing a vessel makes yachting far more stress-free and pleasurable for everyone involved.


Louise Lay works in a boutique firm offering a wide range of services to yachts large and small, from management of crew to charter and sales.

Tags: Limited Liability, Yacht Ownership