NIGERIA Law and Practice Contributed by: Tamuno Atekebo, Chinasa Unaegbunam, Naomi Kabowei and Favour Osayuwamen, Streamsowers & Köhn
3.2.12 “Parallel Debt” Structures Parallel debt structures can be used in Nigeria, allow - ing the security trustee to have an independent right to the secured debt and enabling separate enforcement of the security. 3.2.13 Effect of Security Assignments on Residence of Secured Parties Becoming a secured party under a security assign - ment does not automatically result in residency, domi - cile, business presence or tax obligations. However, seeking tax advice is recommended based on the specific circumstances and Nigerian tax regulations. 3.2.14 Perfection of Domestic Law Mortgages A domestic law mortgage can be perfected by draft - ing a mortgage agreement outlining the terms of the mortgage, including the amount secured, the parties involved, and the details of the aircraft or engine. Both the borrower and the lender should sign the mortgage agreement. The mortgage must be registered with the NCAA, and the necessary fees and charges for regis - tration must be paid. If the mortgagor is a company registered in Nigeria, the charge created over the aircraft or engine (or both) as one of the assets of the company should also be registered at the Corporate Affairs Commission by fil - ing a Form CAC 9 (Particulars of Charge) – with addi - tional information setting out a high-level description of the asset being charged, including details such as the manufacturer’s serial number and the NCAA reg - istration number of the charged asset. The costs associated with the foregoing are calcu - lated as follows: • stamping – 0.375% of the mortgage value; • registration at the Corporate Affairs Commission – 0.35% of the mortgage value; • registration with the NCAA – (a) on the first NGN100,000 of the secured sum, for each complete 10,000 – NGN1,000; (b) on the next NGN900,000, for each NGN100,000 or part thereof – NGN1,000; and (c) thereafter, for each NGN1 million or part thereof – NGN50,000.
However, the maximum charge for registration with the NCAA is capped at NGN250,000. Upon successful registration, the NCAA will issue a perfection certificate, confirming the mortgage’s reg - istration. In addition, if the aircraft or engine is cov - ered by the Cape Town Convention, the necessary international interest registration will be filed with the International Registry in compliance with the conven - tion’s requirements. 3.2.15 Differences Between Security Over Aircraft and Spare Engines There are no differences in the form of security (or perfection) taken over an aircraft and spare engines in Nigeria. 3.2.16 Form and Perfection of Security Over Bank Accounts A “fixed charge” or ”fixed security interest” is com - monly used to secure a bank account such as a lease receivables account. To perfect the security interest over the bank account, a security agreement is exe - cuted between the debtor and creditor, outlining terms and details. Notice is also given to the bank where the account is held, informing them of the security inter - est. Restrictions may also be placed on the account’s use, and registration with the Corporate Affairs Com - mission is required. 3.3 Liens 3.3.1 Third-Party Liens Third parties such as repairers, airports, and customs authorities can potentially take or register liens over an aircraft or engine for unpaid fees or charges. • Repairers’ liens cover work done on the actual secured asset for the value of the work performed, rather than the contract price. They may cover work done on other assets. • Fleet liens, allowing third parties to detain an air - craft, have not been considered in Nigeria. 3.3.2 Timeframe to Discharge a Lien or Mortgage There is no stipulated average timeframe to discharge a lien or mortgage over an aircraft. Where there are no contentions, a reasonable timeframe will be three months.
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