Stock Pledge And Security Agreement Template for Hong Kong

The Stock Pledge and Security Agreement is a crucial document in secured financing transactions under Hong Kong law, typically used when shares are offered as collateral for loans or other obligations. It establishes a security interest over shares owned by the pledgor in favor of the pledgee, providing the latter with rights to enforce against the shares upon occurrence of specified default events. The agreement must comply with Hong Kong's legal framework, particularly the Companies Ordinance and Securities and Futures Ordinance, and requires proper registration of the security interest. This document is essential in various contexts, including acquisition financing, corporate restructuring, and general secured lending, where shares serve as valuable collateral. The agreement comprehensively addresses share transfer mechanics, voting rights, dividend entitlements, and enforcement procedures, while incorporating necessary protections for both pledgor and pledgee.

1. Parties: Identifies the pledgor (security provider), pledgee (security taker), and the company whose shares are being pledged

2. Background: Sets out the context of the agreement, including reference to any underlying facility or obligation being secured

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles for the agreement

4. Grant of Security Interest: Core provision establishing the pledge and security interest over the shares

5. Secured Obligations: Defines the obligations being secured by the share pledge

6. Representations and Warranties: Pledgor's confirmations regarding ownership, authority, and absence of encumbrances

7. Covenants: Ongoing obligations of the pledgor regarding the pledged shares

8. Voting Rights and Dividends: Provisions governing exercise of voting rights and receipt of dividends pre and post-enforcement

9. Further Assurance: Obligation to execute additional documents and take necessary steps to perfect the security

10. Events of Default: Circumstances triggering enforcement rights

11. Enforcement: Rights and procedures for enforcing the security interest

12. Power of Attorney: Appointment of pledgee as attorney to perfect or enforce security

13. Notices: Process for giving notices under the agreement

14. Assignment and Transfer: Rights to assign or transfer rights under the agreement

15. Governing Law and Jurisdiction: Specifies Hong Kong law and jurisdiction