3rd Annual Offshore Aircraft Registration – Aircraft Fractional Ownership
Published on December 16, 2013
The 3rd Annual Offshore Aircraft Registration Conference took place on the 12th and 13th of December 2013 in Oranjestad, Aruba. The Conference has drawn participants from civil aviation authorities, aircraft maintenance facilities, financial institutions, aircraft consultancy agencies and lawyers, to name a few.
David Wever, partner at AMDC Law, was a speaker at this Conference and discussed the concept of ‘Aircraft Fractional Ownership’. He specifically explained securities rights, such as mortgages, and structures that make registration and financing of Aircraft Fractional Ownership in Aruba possible.
The term Aircraft Fractional Ownership is used when several companies or individuals (directly or indirectly) own shares in an undivided aircraft. By doing so these companies share first and foremost the initial purchase price of the aircraft and of course later also the operational costs.
As Wever explained during his speech, in order for an Aircraft to be registered in Aruba, the aircraft must either be owned by or leased to an Aruban resident or a company having a corporate seat in Aruba. This is the so-called ‘Aruban connection’. In order for foreign fractional owners to own an aircraft to be registered in Aruba, an Aruban company must be set up to either own or lease the aircraft. Wever explained a couple of possible structures that can be used to make registration of aircraft for the purpose of fractional ownership possible.
A fractional ownership buyer might require financing for the purchase of a fraction in an Aircraft. Under Aruban law, as Wever explained, a mortgage on a fraction of an aircraft is possible. Furthermore, Aruba is party to the Cape Town Convention, which makes the creation of an ‘International Interest’ possible. An International Interest can be compared with an ‘international mortgage’, enforceable in all countries and territories party to the Cape Town Convention. An International Interest can also be created over a fraction of an aircraft. The latter makes it attractive for banks to finance aircraft fractional ownership registered in Aruba.
Please click the following link for the complete PowerPoint presentation – Aircraft Fractional Ownership
