Loan Against Shares Agreement Template for England and Wales

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Key Requirements PROMPT example:

Loan Against Shares Agreement

"I need a Loan Against Shares Agreement where my company will borrow £5 million from Bank XYZ, secured against our 15% shareholding in Tech Solutions Ltd, with quarterly interest payments and a final repayment date of March 2025."

Document background
The Loan Against Shares Agreement is commonly used when shareholders require financing while retaining potential upside in their shareholding. This agreement type, governed by English and Welsh law, enables borrowers to access funds using their shares as collateral while maintaining beneficial ownership. The document covers crucial aspects including valuation mechanisms, margin maintenance requirements, default triggers, and enforcement procedures. It's particularly relevant in scenarios involving listed securities, private company shares, or investment portfolios, and must comply with UK financial services regulations and security interest requirements.
Suggested Sections

1. Parties: Identification of lender and borrower

2. Background: Context of the loan and share arrangement

3. Definitions: Key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of loan amount and intended use

5. Security Arrangements: Details of share pledge and security structure

6. Repayment Terms: Payment schedule and interest provisions

7. Representations and Warranties: Standard assurances from both parties

8. Events of Default: Circumstances triggering default

9. Enforcement Rights: Lender's rights upon default

Optional Sections

1. Margin Call Provisions: Additional security requirements based on share value fluctuations - used for volatile shares or higher risk loans

2. Dividend Rights: Treatment of dividends during security period - used when shares regularly pay dividends

3. Voting Rights: Exercise of voting rights during security period - used for significant shareholdings

Suggested Schedules

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

2. Schedule 2 - Repayment Schedule: Detailed payment dates and amounts

3. Schedule 3 - Security Documents: Forms of share transfer, power of attorney, and other security documents

4. Schedule 4 - Conditions Precedent: Documents and conditions required before loan drawdown

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 legal definitions
Clauses
Relevant Industries
Relevant Teams
Relevant Roles
Industries

Financial Services and Markets Act 2000 (FSMA): Primary legislation regulating financial services and markets in the UK, including requirements for authorized lenders and consumer protection provisions

Consumer Credit Act 1974: Legislation governing credit agreements, including disclosure requirements and consumer protections, applicable when lending to individuals

Companies Act 2006: Core company law legislation covering share transfer provisions, registration of charges, and company documentation requirements

Financial Collateral Arrangements (No 2) Regulations 2003: Regulations specifically dealing with financial collateral, enforcement rights, and security interest provisions

Law of Property Act 1925: Fundamental property law governing creation and enforcement of security interests and legal requirements for charges

Financial Services and Markets Act 2000 (Regulated Activities) Order 2001: Secondary legislation defining regulated lending activities and associated licensing requirements

GDPR and Data Protection Act 2018: Data protection legislation establishing requirements for handling personal data and privacy considerations

Money Laundering Regulations 2017: Regulations establishing due diligence requirements and compliance obligations for financial transactions

Financial Services and Markets Act 2000 (Financial Promotion) Order 2005: Legislation governing marketing and promotional restrictions and communication requirements in financial services

UK Listing Rules and FCA Handbook: Regulatory framework for publicly traded shares, including requirements for listed securities and disclosure obligations

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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