Aircraft fractional ownership in aruba
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Aircraft Fractional Ownership in Aruba. From a financing perspective. Agenda 1.Fractional Ownership 2.Relevant registration requirements 3.Financing needs 4.Securities - Pledge on shares - Aruba Mortgage - Geneva Convention

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Aircraft Fractional Ownership in Aruba

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Aircraft fractional ownership in aruba

Aircraft Fractional Ownership in Aruba

From a financing perspective


Aircraft fractional ownership in aruba

  • Agenda

  • 1.Fractional Ownership

  • 2.Relevant registration requirements

  • 3.Financing needs

  • 4.Securities

  • - Pledge on shares

  • - Aruba Mortgage

  • - Geneva Convention

  • - Cape Town Convention (international interest)

  • 5.Structures & Securities

  • 6.Recommendations


Aircraft fractional ownership in aruba

Fractional Ownership (i)


Aircraft fractional ownership in aruba

Fractional Ownership (ii)

  • Shared:

  • Purchase price

  • Management costs

  • Operational costs

  • Storage costs


Aircraft fractional ownership in aruba

Relevant Registration Requirements (i)

  • Aruba has two public registers for the registration of Aircraft:

  • Nationality Register

  • Title Register


Aircraft fractional ownership in aruba

Relevant Registration Requirements (ii)

Nationality Register (“NR”):

the owner of the aircraft is a resident of Aruba or has its corporate seat in Aruba; or

if the aircraft has been leased to a resident of Aruba or an entity, having its corporate seat in Aruba.

 This is the so called ‘Aruba connection’


Aircraft fractional ownership in aruba

Relevant Registration Requirements (iii)

Question: Can multiple owners/holders register an Aircraft in the NR?

Under Aruban law joint ownership possible

- Parties may determine percentage of ownership

b. Under Aruban law there can be more than one holder

The law states: ‘an owner/a holder may register’

d. Comparison with Dutch law


Aircraft fractional ownership in aruba

Relevant Registration Requirements (iv)

Answer: Yes

Under Aruban law joint ownership possible

- Parties may determine percentage of ownership

b. Under Aruban law there can be more than one holder

The law states: ‘an owner/a holder may register’

d. Comparison with Dutch law


Aircraft fractional ownership in aruba

Relevant Registration Requirements (v)

  • Title Register

  • Registration in Title Register possible after registration in NR is complete

  • The Title Register is an owner register

  • Registration by multiple owners possible


Aircraft fractional ownership in aruba

Relevant Registration Requirements (vi)


Aircraft fractional ownership in aruba

Securities (i)

  • Bank will request security of payment in the form of collateral

  • Security will have to be enforceable in other Jurisdictions

  • Geneva Convention

  • (i) mortgage pursuant to laws of country of registration

  • (ii) recorded in a public register in that country


Aircraft fractional ownership in aruba

Securities (ii)

  • Cape Town Convention

  • - international interest:(a) in writing

  • (b) debtor has power to dispose to an aircraft

  • (c + d) enables aircraft and secured obligations to be identified

  • Sphere of application: (a) debtor is situated in Contracting State (aircraft)

  • (b) aircraft is registered in a Contracting State

  • (only applicable to airframe is the debtor is not situated in contracting state)


Aircraft fractional ownership in aruba

Securities (iii)

  • Pledge on Shares

  • Pledge on Aircraft

  • Aruban Law Mortgage

  • Lease Agreement as an International Interest


Aircraft fractional ownership in aruba

Structures and Securities (i)

‘Fractional owner’ does not actually own a fraction in the aircraft, but is

Shareholder of the SPV owning the aircraft


Aircraft fractional ownership in aruba

Structures (ii)

Fractional ‘Owners’ as lessees

 $ Bank

Lease 

Assignment of

Int. Interest


Aircraft fractional ownership in aruba

Structures (iii)

An SPV for each owner to jointly register aircraft in NR


Aircraft fractional ownership in aruba

Structures (iii)

Owners lease the aircraft to one Aruban SPV

Lease


Aircraft fractional ownership in aruba

Closing remarks


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