gister 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.

Flag of convenience register--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 register 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 ships registered 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.

Flag state--The nation in which a ship is registered and which holds legal
jurisdiction over operation of the ship, whether at home or abroad. Differences
in flag state maritime legislation determine how a ship is manned and taxed and
whether a foreign-owned ship may be placed on the register.

Internal register--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, manning by foreign nationals, 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.

Merchant ship--A vessel that carries goods against payment of freight; commonly
used to denote any nonmilitary ship but accurately restricted to commercial
vessels only.

Register--The record of a ship's ownership and nationality as listed with the
maritime authorities of a country; also, the compendium of such individual
ships