Menu Sign In Contact FAQ
Banner
Welcome to our forums

Non equity / zero equity groups

The terms “equity group” and “non-equity group” are used in connection with aircraft owner groups. What do they mean?

ESKC (Uppsala/Sundbro), Sweden

It refers to the legal company construction of the aircraft owners group. You may enter an owners group purchasing only the right to use the aircraft (non-equity) or become owner of aircraft shares (equity).

So in an non-equity group, the group is a legal person that owns the aircraft?

ESKC (Uppsala/Sundbro), Sweden

Non-Equity Group could have an individual person as the owner, or a Company.

EGLK, United Kingdom

It all depends on the legal agreement, having seen some called “equity group” but the wording actually look like a “rental”…

I heard many set-ups:
- A person/company own the aircraft and rent it to non share members (don’t own the aircraft). If it is a fixed number of named users who own the right to use it: I would call it a non-equity group otherwise I don’t see how this is different from a vanilla rental?

- A company that owns the aircraft and issue shares that give the right to use it. Equal shares: you may call it equity, non-equal shares: say one shareholder has majority and others 1$, it is a bit black and white: while you may call it equity some would call it non-equity/rental, I think “equity with non-voting right” is more appropriate?

- A group of persons who own an aircraft and have a tailored agreement on how to use it: I don’t think a lawyer would call this “equity in the legal sense” unless he looks at agreement specs: if one guy have all finacial/legal responsiblity, I doubt it is an “equity group”…

Paris/Essex, France/UK, United Kingdom

A “non equity group” is indeed a vague concept.

It can be anything from

  • a fairly formal purchase of an “hour block for the year” plus a wet rate for each hour flown (a UK based multi-SR22 operation used to do that), to
  • pure rental (so there is no group as such; just a bunch of “approved renters”)

and anything in between.

I used to run one many years ago, which was initially pure rental (expensive insurance!) but later had the named pilots on the insurance policy. I used to bill the fuel at cost, separately, so it was “dry” rental. Also not having actual shares in the plane potentially enables the UK “benefit in kind” tax attack – much posted on that previously.

Administrator
Shoreham EGKA, United Kingdom

Don’t make it too difficult

Equity Group: You own a part of the plane. Pay for the stake, pay monthlies and pay for flying

Non-Equity Group: You do not own the plane but pay for access. Pay monthlies and pay for flying

Renting: You pay for flying only

EGTR

@mmgreve that summarize it all

You also get “pay as bills comes up” instead of “pay monthlies” and the whole “wet/dry” for flying, you only know better about what type of group you are in when unexpected maintenance comes in

Paris/Essex, France/UK, United Kingdom

@ibra, sorry but you know exactly what kind of group you’re in. If you own an asset, it is an Equity Group. If you don’t, it is Non-Equity

EGTR

What if the thing you own is an hour block entitlement?

Ultimately, nothing shields you from unexpected costs. The sum total of the users have to fund the sum total of the expenses. The differences are only in “details” like whether you can walk away and leave the owner holding the baby to pay for a new engine / new plane – like a pure renter can do. But still then the renter loses the use of that plane.

Administrator
Shoreham EGKA, United Kingdom
19 Posts
Sign in to add your message

Back to Top