A captive register is a register of ships maintained by a territory, possession, or colony primarily or exclusively for the use of ships owned in the parent country; it is also referred to as an offshore register, the offshore equivalent of an internal register. Ships on a captive register will fly the same flag as the parent country, or a local variant of it, but will be subject to the maritime laws and taxation rules of the offshore territory. Although the nature of a captive register makes it especially desirable for ships owned in the parent country, just as in the internal register, the ships may also be owned abroad. The captive register then acts as a flag of convenience register, except that it is not the register of an independent state.
A flag of convenience register is a national register offering registration to a merchant ship not owned in the flag state. The major flags of convenience (FOC) attract ships to their registers by virtue of low fees, low or nonexistent taxation of profits, and liberal manning requirements. True FOC registers are characterized by having relatively few of the registered ships actually owned in the flag state. Thus, while virtually any flag can be used for ships under a given set of circumstances, an FOC register is one where the majority of the merchant fleet is owned abroad. It is also referred to as an open register.
A flag state is the nation in which a ship is registered and which holds legal jurisdiction over operation of the ship, whether at home or abroad. Maritime legislation of the flag state determines how a ship is crewed and taxed and whether a foreign-owned ship may be placed on the register. An internal register is a register of ships maintained as a subset of a national register. Ships on the internal register fly the national flag and have that nationality but are subject to a separate set of maritime rules from those on the main national register. These differences usually include lower taxation of profits, use of foreign nationals as crew members, and, usually, ownership outside the flag state (when it functions as an FOC register). The Norwegian International Ship Register and Danish International Ship Register are the most notable examples of an internal register. Both have been instrumental in stemming flight from the national flag to flags of convenience and in attracting foreign-owned ships to the Norwegian and Danish flags.
A merchant ship is a vessel that carries goods against payment of freight; it is commonly used to denote any nonmilitary ship but accurately restricted to commercial vessels only.
A register is the record of a ship's ownership and nationality as listed with the maritime authorities of a country; also, it is the compendium of such individual ships' registrations. Registration of a ship provides it with a nationality and makes it subject to the laws of the country in which registered (the flag state) regardless of the nationality of the ship's ultimate owner.
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