Equity Pledge Agreement Template for England and Wales

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Key Requirements PROMPT example:

Equity Pledge Agreement

"I need an Equity Pledge Agreement for a UK private limited company pledging 25% of its shares to secure a £2M loan facility, with voting rights remaining with the pledgor until default occurs."

Document background
An Equity Pledge Agreement is commonly used in financing transactions where shares are offered as collateral for loans or other obligations. This document, governed by English and Welsh law, sets out the terms under which shares are pledged, including the creation of the security interest, the rights and obligations of both pledgor and pledgee, enforcement mechanisms, and the treatment of shareholder rights during the pledge period. It is particularly important in secured lending transactions, corporate restructurings, and investment arrangements where share security is required.
Suggested Sections

1. Parties: Identification of pledgor, pledgee, and any other relevant parties

2. Background: Context of the pledge arrangement and underlying relationship

3. Definitions: Key terms used throughout the agreement

4. Pledge and Security Interest: Core provisions creating the security interest over shares

5. Representations and Warranties: Pledgor's confirmations regarding ownership and authority

6. Covenants: Ongoing obligations of the pledgor

7. Enforcement: Rights and remedies upon default

Optional Sections

1. Voting Rights: Provisions regarding exercise of voting rights during the pledge period

2. Dividend Rights: Treatment of dividends and other distributions during pledge period

3. Further Assurance: Additional actions required to perfect security and maintain its validity

Suggested Schedules

1. Schedule 1 - Share Details: Details of pledged shares including class, number, and issuing company

2. Schedule 2 - Form of Stock Transfer Form: Standard form for transfer of shares upon enforcement

3. Schedule 3 - Notice of Pledge: Form of notice to be given to the company whose shares are pledged

4. Schedule 4 - Powers of Attorney: Form of power of attorney for enforcement purposes

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant Industries
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Core legislation governing company law in England and Wales, particularly relevant for share transfers, security interests, and registration requirements for company charges

Financial Collateral Arrangements (No.2) Regulations 2003: Implementation of EU Directive 2002/47/EC, governing the creation and enforcement of security over financial collateral in England and Wales

Law of Property Act 1925: Foundational legislation establishing general principles regarding security interests and their enforcement under English law

Financial Services and Markets Act 2000: Regulatory framework for financial services, relevant for determining whether the arrangement involves regulated activities and requires FCA authorizations

Companies House Requirements: Administrative requirements including registration of charges (Form MR01) and People with Significant Control (PSC) considerations

Insolvency Act 1986: Legislation governing the impact of security enforcement during insolvency and validity of security interests in insolvency scenarios

Common Law Principles: Established case law and equitable principles relating to security interests and their enforcement in England and Wales

Financial Services (Banking Reform) Act 2013: Additional regulatory framework particularly relevant when the pledge agreement involves regulated financial institutions

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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