Taking a pledge over shares issued by a Mauritian company
Under Mauritian laws, a pledge is the actual or constructive delivery of possession of an asset by way of security. The principles are derived from French law. Below are 5 things you should bear in mind when take a pledge over shares issued by a Mauritian company:
- Applicable law Private international law of security interest would guide that the law applicable to a share pledge is the law governing the shares i.e. the law of the jurisdiction of incorporation of the issuer of the shares. Following this principle, a pledge over shares issued by a Mauritian company should be governed by Mauritian laws, this will ensure that the security is properly created, perfected and will be directly enforceable.
- Several legal regimes There are different regimes of share pledges available under Mauritian law which would offer more or less flexibility to the parties depending on the status of the beneficiary (bank under the Banking Act 2004, a financial institution), the nature of the transaction which is secured (civil or commercial) or the status of the issuer of the shares (a company holding a licence from the Financial Services Commission).
- Status of the grantor The grantor does not have to be a principal debtor.
- No registration There is no need to register a share pledge with the Registrar General for its validity and enforceability in Mauritius. Registration remains an option for other reasons.
- Release Upon discharge of the secured obligation, the release of the security is straight-forward and does not require additional formalities or filings to be effective.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
