MADAGASCAR Law and Practice Contributed by: Claudy Monja and Sarah Razafindrafito, John W Ffooks & Co
interests are not jeopardised, as long as this change is documented and updated at the CAA. 3.2.12 “Parallel Debt” Structures These types of structures have not been seen in Mad - agascar. 3.2.13 Effect of Security Assignments on Residence of Secured Parties A secured party under a security assignment would not be deemed to be resident or domiciled in Mada - gascar and would not be subject to any taxes as a result of its being a party to, or its enforcement of, any such security assignment. 3.2.14 Perfection of Domestic Law Mortgages A domestic law mortgage over an aircraft or engine should be registered with the tax authority and the CAA in order to be perfected. In practice, this kind of situation has not been seen in Madagascar. 3.2.15 Differences Between Security Over Aircraft and Spare Engines There are no differences between the form of security (or perfection) taken over an aircraft and that taken over spare engines. 3.2.16 Form and Perfection of Security Over Bank Accounts Security over a bank account usually takes the form of a pledge. A pledge over a bank account should be registered with the tax authority and the companies’ registry to be perfected. 3.3 Liens 3.3.1 Third-Party Liens The Malagasy Security Law does not provide for any specific provisions on liens. However, the closest con - cepts under Malagasy law are the retaining right and the possessory pledge. The Retaining Right The retaining right is the right of a creditor to retain in its possession a debtor’s asset in an event of default and until full payment of the debts. This is applicable to movable assets and properties. It should be noted that the retaining right is not subject to any agreement or registration formalities in order to be enforceable.
The creditor’s security is materialised by its right to retain in its possession the asset that is the object of the dispute. For example, an aircraft maintenance service company is entitled to retain an aircraft in its possession if the aircraft operator fails to pay the maintenance fees. The Possessory Pledge The possessory pledge is an agreement between a pledgee and a pledgor that allows the pledgee to enter into possession of an agreed movable asset (exclud - ing an aircraft) until full payment of the debt. This is not applicable to an aircraft, as it is not considered to be a movable asset under the Malagasy Security Law and the Civil Aviation Code. Neither the retaining right nor the possessory pledge is subject to registration formalities. These securities are only materialised by the creditor taking possession of the assets. 3.3.2 Timeframe to Discharge a Lien or Mortgage There is no specific timeframe to discharge a lien or mortgage over an aircraft. From the authors’ experi - ence, this may take up to six months. The main issue in Madagascar is the risk of an administrative delay. 3.3.3 Register of Mortgages and Charges The Aircraft Register operated by the CAA is the reg - ister for mortgages and charges. The interests of an aircraft mortgagee or security trustee can be noted on the Aircraft Register and the effect of any such nota - tion is enforceability towards third parties. 3.3.4 Statutory Rights of Detention or Non- Consensual Preferential Liens There are no specific provisions on liens under the Malagasy Security Law. The closest concept is that Madagascar has made a declaration under Article 39 of the Convention right of detention in favour of employees, fees, taxes and royalties due to the Republic of Madagascar or any other public entities, and the right of detention in favour of suppliers (eg, in respect of maintenance services) means that they have priority over registered international interests. None of the provisions of the Convention will prevent the Republic of Madagascar or any public entity or any supplier of a public entity from performing its right of
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