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

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

  • - Cape Town Convention (international interest)

  • 5. Structures & Securities

  • 6. Recommendations



Fractional Ownership (ii)

  • Shared:

  • Purchase price

  • Management costs

  • Operational costs

  • Storage costs


Relevant Registration Requirements (i)

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

  • Nationality Register

  • Title Register


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’


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


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


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



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


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)


Securities (iii)

  • Pledge on Shares

  • Pledge on Aircraft

  • Aruban Law Mortgage

  • Lease Agreement as an International Interest


Structures and Securities (i)

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

Shareholder of the SPV owning the aircraft


Structures (ii)

Fractional ‘Owners’ as lessees

 $ Bank

Lease 

Assignment of

Int. Interest


Structures (iii)

An SPV for each owner to jointly register aircraft in NR


Structures (iii)

Owners lease the aircraft to one Aruban SPV

Lease



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