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Passenger ships - usually defined as a ship carrying more than 12 passengers - on international voyages must comply with all relevant IMO regulations, including those in the SOLAS and Load Lines Conventions.
This was taken from the IMO's page on passenger ships and as such takes passenger cabin count before gross tonnage. Many large yachts have passenger cabins for more than 12, but mysteriously these so called surplus "passengers" become nannies or personal staff and are manifested as part of the crew.
I'm a little confused as to the original posters boss looking for a new boat over 500 ton. The usual requests fall into the on-board capability/ overall size and from that tonnage can be determined. A sharp NA can make quite a large yacht still fall under 500 tons due to the vagaries of the ad-measurement systems.
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