CYPRUS: 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
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.
For further information on this topic please contact: Mr. Soteris Pittas( spittas@pittaslegal.com) at SOTERIS PITTAS & CO LLC, By telephone (+357 25 028460) or by fax (+357 25 028461)
