Enforcement Of Pledge Under Cyprus Law And The Statutory Obligation Of Pledgee, To Give Notice To Pledgor, For Its Intention To Sell The Pledged Shares – Corporate/Commercial Law

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Enforcement Of Pledge Under Cyprus Law And The Statutory Obligation Of Pledgee, To Give Notice To Pledgor, For Its Intention To Sell The Pledged Shares


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A pledgee, even if the pledge agreement provides that it can
proceed to sell the pledged shares, without any prior notice to the
pledgor, is obliged under Section 134 of Contract Law CAP. 149, to
give to the pledgor, a reasonable written notice, about its
intention to proceed to sell the pledged shares, thus giving the
chance to the pledgor to exercise its equitable right to redeem, by
setting all secured debt, and obligation and obtaining back the
title of the pledged shares.

The provisions contained in Section 134 of Contract Law, are
mandatory, and cannot be excluded or restricted by contract or any
other arrangement.

In so far, any contractual provision in a pledge agreement,
intends to exclude or limit, such an obligation of the pledgee to
give reasonable notice to pledgor, is void and unenforceable.

Any sale of the pledged shares by the pledgee, without
compliance to Section 134 of Contract Law CAP. 149, constitutes a
conversion of the pledged shares by the pledgee, exposing him to
liability for damages etc.

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.

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