19.1 Introduction

19.1.1 A ship will often be owned by a special purpose company (SPC). In this context, this will be a company that is established for the purposes of owning the ship. It will carry on no business and own no other assets, other than those which are incidental to that purpose. Even where a shipping group owns numerous ships, it will more often than not be via a series of SPCs, one for each ship. The aim of such corporate structures is to limit liabilities to that company and ship. The financing documents which an SPC enters into will invariably contain restrictions by way of negative undertakings which are aimed at preserving this state of affairs. Its constitutional documents might also give effect to its limited purposes, so that it is not only under contractual restrictions but also under restrictions imposed by corporate law as regards its capacity. Such a company is often colloquially referred to as being ‘ring-fenced’, especially when its constitutional documents are so prescriptive.