Pledge of shares in a Cyprus company is a systematic way of granting security in commercial transactions. Outside court jurisdiction, the security can be used as collateral and be enforced. The pledge creates an assurance to the creditors, until the debtor fulfils the obligations of the contract. The Creditors are responsible for making sure that the pledge agreements and the deliverables agree with the Law.
Importance of Pledge of shares in Cyprus
Charge
Charges against the pledgor are created. A pledge share charge usually implies that the creditor doesn’t obtain ownership of the merchandise. Instead, the pledge share gives the chargee the right to claim repayment of the debt. In the case of a default, the charge has the right to assume possession of the assets and sell it in order to recover the debt still owed to them.
- Creditor
Party that is owed money.
- Debtors
A company that owes money.
- Pledger
Someone who takes a pledge.
Registration of Pledge Process
- As per the Company Law, a Cyprus Company can proceed with the registration of pledge share or floating charge to the Registrar of Companies for its own shares or its subsidiaries shares (property).
- According to the law, a floating charge can be registered on the property of a Company. The property can be receivables, rents, insurance proceeds and unissued share capital.
- In addition, based on the provision of Article 90 of the Cyprus Company Law Cap 113, if a charge was created outside the Republic of Cyprus, the registration of the particulars of every charge that was created by a Company, must be submitted to the Registrar within forty-two (42) days from the date of the creation of the charge.
- A pledge agreement is also a prerequisite for the registration of a pledge or floating charge. The pledge agreement must be separate from any Loan Agreement related to it and must contain the name of the Company, the Beneficiary, the Secured amount and a paragraph referring the charge.
- For the Registrar to accept the pledge, it must be translated by a translator of the Republic of Cyprus.
- As long as the Registrar of Companies is satisfied that the relevant requirements regarding the circumstance’s legal requirements have been met, the charge is then registered to the Companies House.
- The Registrar of Companies will proceed to issue the certificate of registration, once the charge is registered.
Pledge enforcement
If the enforcement of pledge is necessary, the process that does not include judiciary enforcement is to implement the documents that were agreed upon when making the deal. This is valid as long as there has been reasonable notice given.
The pledgee has the right to sell the shares and keep the amount that they are owed, if the pledger defaults on their obligations. When the creditor is selling the shares, he has an obligation to act in good faith and get the best possible price.
Cyprus Company FAQ
What is a pledge share?
A pledge share is a way of granting security in commercial transactions.
This security can be enforced outside the courts.
What do we mean by the term 'Charge'?
The charges are created against the pledgor.
A pledge share charge usually implies that the creditor doesn’t obtain ownership of the merchandise.
How do you enforce a pledge?
The first thing to do is to implement the documents that were agreed upon when making the deal.
The pledgee could always utilize their right to sell the shares and keep the amount that they are owed, if the pledger defaults on their obligations.
How long does it take to form a company in Cyprus?
To form a company in Cyprus is very easy process.
Normally, it takes around 5-7 business days, however, if an already approved name has been chosen by our client it could take up to 3-4 business days.
We at MARICORP hold over 10-15 approved Cyprus Company names at any given point.
How do you open a Bank account in Cyprus?
For this process you will need the below documents to apply with:
- Passport copy certified with Apostille.
- Curriculum Vitae (CV) of beneficial owner.
- The Source and value of wealth, such as Tax Declaration, Payslips, Dividend certificates and bank statements.
- Recent utility bill (within 3 months) in original as a proof of residential address such as: electricity, gas, internet, water or landline phone.
- Recent bank reference letter (issued within 3 months) in original.
Contact us
Where to find us:
81, Griva Digeni Avenue, MARINOS Court, 3rd floor, office 301
P.O. BOx 42656, P.C. 6501, 6043
Larnaca – Cyprus
Tel: +357 24663402 , Fax: +357 24663409
E-mail: admin@cyprusconsultancy.com
