Is the Offshore Still Offshore? The Impact of Corporate Governance Practice and IPO in the Shipping Market

Abstract

Offshore is often synonym of lack of transparency and avoidance of responsibilities and tax liabilities. Any definition of offshore will focus on the friendly tax and easy legal system of the so called 'offshore countries' or 'offshore centres', where generally speaking, the absence of compliance rules and non disclosure of identity are master words. Shipping is surely the main industry present in such offshore centres for corporate and flag matters. All started many decades ago, when in 1949 the vessel World Peace, owned by Mr. S. Niarchos was registered under Liberian flag; this was the commencement of the International Registry Inc. adventure, which saw the creation of the international Trust Company of Liberia, that quickly became the main provider of corporate and offshore services. Without analysing the evolution of this growing practice over the past fifty or sixty years, it is right to say that today, the use of companies registered in Panama, Marshall Islands, Liberia, Bahamas, Bermuda and other similar countries to own vessels is a common practice, accepted not only within the shipping circles but also by banks, insurances, traders and states. But what is interesting us is the fact that, with the several IPOs launched in the last years on the New York Stock Exchange for newly created shipping companies (for instance, Quintana Maritime LLC in 2005 or OceanFreight Inc. in 2007), with the application of the stock exchange strict regulations and principles of corporate governance, things are changing in a way that will help offshore companies and offshore countries to become fully accepted entities and bodies by our international economy and legal system. The aim of this article is to show how offshore corporate system is similar to the onshore one and that the general criticism against it is not justified.