Opportunities under the Aircraft Registration Act
Building on the success of its Shipping Register, which has grown into the 2nd largest in Europe, Malta is committed to establishing itself as a leading Aircraft Register. The Aircraft Registration Act 2010 (hereinafter the ‘Act’) was drafted with a view to consolidate the laws and establish an adequate legal framework that would help create and effectively support a successful aviation register in Malta. Malta also acceded to the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol.
The Act regulates:
- The registration of aircraft and aircraft mortgages;
- The aircraft register;
- The recording and enforcement of aircraft mortgages and other interests in aircraft;
- The special privileges on aircraft;
- The ranking of secured creditors;
- The implementation of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol and its interface with domestic law.
The Act introduced broader registration possibilities, including:
- Applicants who may register an aircraft include an owner of an aircraft under construction, an operator of an aircraft under temporary title such as a lease, and a buyer under a conditional sale.
- Any type of aircraft can be registered including helicopters, airframes, and aircrafts under construction.
- Aircraft engines may also be registered, allowing for engine financing opportunities.
- Registrants of private aircrafts are not subject to the qualifying requirements of aircraft used for “air services”, which need to obtain a Maltese operating license.
- The concept of fractional ownership, which represents a part share in an aircraft that entitles the holder to use the aircraft for a certain amount of time over a specified period. This can substantially cut the user cost of business aviation and grants more flexibility.
- The Act also provides for the registration of an aircraft under the terms of a beneficial trust.
Persons eligible to register an aircraft in Malta:
For any aircraft:
- The Government of Malta;
- Citizen of Malta or a citizen of a Member State of the E.U. or of an EEA State, or Switzerland, having a place of residence or business in Malta, the E.U., the EEA, or Switzerland, including a person sharing in the ownership of such aircraft by virtue of the community of acquests subsisting between such person and a citizen as described above in whose name the aircraft is registered;
- An undertaking formed and existing in accordance with the laws of Malta, of a Member State of the E.U., of an EEA State, or of Switzerland and having its registered office, central administration and principal place of business within Malta, or the E.U., or the EEA, or Switzerland, whereof not less than 50% of the undertaking is owned and effectively controlled by the Government of Malta, or by any Member State of the E.U. or by persons referred to above, whether directly or indirectly through one or more intermediate undertakings.
For a private aircraft:
- A natural person who is a citizen of, or an undertaking established in a member country of the Organisation for Economic Co-operation and Development and any other country approved by the Minister by notice for the purposes of the Act (termed “International Registrant” in the Act), provided:
- It has legal capacity to own / operate an aircraft in terms of law;
- It appoints a local resident agent to represent the owner in Malta for matters concerning the registration of the aircraft;
- It complies with applicable regulations/guidelines.
Information entered in the National Aircraft Register:
Mandatory entries in the register:
- The physical details of the aircraft and the engines attached to the aircraft and any replacement engines owned by the registrant to the extent they are designated for use on the aircraft;
- The name and address of the registrant in what capacity the registrant has registered the aircraft;
- The details of any mortgages registered over the aircraft and subsequently all registrable transactions relating to the mortgages;
- The details of any irrevocable de-registration power of attorney, or other power of attorney granted to an owner or to a lessor of an aircraft or granted by way of security to the mortgagee, or to a third party, granting powers relating to the exercise of rights relating to the aircraft, or to the closure of the register on behalf of the registrant.
Permitted entries in the register:
- The ownership rights in the aircraft or an engine including when held by a trustee, by one or more owners, divided into fractional shares, or held under an agreement with reservation of ownership rights or under conditions affecting title.
- The lessee / lessor rights in relation to the aircraft or an engine;
- The details of the resident agent where the registrant is an international registrant;
- Information on any international interest registered in the International Registry, and the debtor thereof;
- Any charge or reservation of ownership rights or lessee rights prior to the registration of a mortgage.
Security of Interests:
Malta was among the first to ratify and implement the Cape Town Convention. The Convention ensures the protection of creditors’ rights and interests on an international scale, particularly with the setting up of an International Registry to record these interests.
Furthermore, a security for any debt or other obligation may be registered on a Maltese aircraft or share therein by means of a mortgage instrument, signed by the mortgagor in favour of the mortgagee in the presence of and attested by a witness. Once the required documents are submitted, the mortgage is recorded in the National Aircraft Register.
Recently, in 2015, there have been proposals to amend the Aircraft Registration Act to reflect the rapid growth that the industry experienced over the past few years, with the aim of attracting more business, and to ensure Malta’s competitiveness in the industry. The proposed amendments provide some minor cosmetic changes, as well as substantive changes to the Act. The proposed substantive changes include the introduction of a “grace period” whereby the lessor or mortgagee can make the necessary arrangements and salvage his position, without the aircraft being deleted from the register, when the person does not qualify as a registrant under the Act due to a change in circumstances. Another proposed amendment relates to the registration of helicopters. While helicopters may be registered in the National Aircraft Register, there are no provisions dealing specifically with helicopters. Should any beneficial treatment be identified for treating helicopters differently from other aircrafts, new amendments will be inserted in order to ensure that the Maltese legislative framework remains competitive on this front. Moreover, currently the Act only allows for a whole aircraft to be offered up as security. The amendments to the Act would allow high-value parts, such as the aircrafts engines, to be given as security as well.