Home / CY AIF Law of 2018 / PART ΙΙ: PROVISIONS REGARDING THE ALTERNATIVE INVESTMENT FUNDS / Chapter 8: Special provisions / Part 1 - Common fund / [50] Pledge of common funds units.

50. Pledge of common funds units.

(1) The units of the common fund may be used as collateral to secure a claim.

(2)  (a) The collateral shall be valid and shall take effect against the external manager of the common fund, from the date it is disclosed to the external manager.

(b) In case the units are listed for trading in a market, on the condition that the necessary procedures regarding the registration of the collateral in the records kept in the context of the operation of the relevant market have been made.

(c) The external manager of the common fund shall record the pledge in the Unitholders’ Register.

(3) The lender shall be satisfied once the pledged units have been redeemed and the payment of the redemption proceeds to the lender, until the redemption of all the pledged units.

(4) Where the pledged units of the common fund, are not redeemed in total, the lender shall maintain its right on the collateral as to the remaining pledged units, without having to conclude and disclose a new collateral agreement.

(5) The external manager of the fund shall record in the Unitholders’ Register the elimination of the pledged units.