Share Pledge Agreement for United Arab Emirates

Share Pledge Agreement Template for United Arab Emirates

A comprehensive security agreement governed by UAE law, specifically designed to create and perfect a security interest over shares in a UAE company. The document establishes the terms and conditions under which shares are pledged as collateral, incorporating specific requirements under UAE Federal Laws, including the Commercial Companies Law and Civil Code. It details the pledge mechanics, perfection requirements, enforcement provisions, and necessary corporate approvals, while ensuring compliance with UAE regulatory requirements and market practice.

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What is a Share Pledge Agreement?

A Share Pledge Agreement is a crucial security document used in UAE financing transactions where shares in a UAE company serve as collateral. This document is typically employed in acquisition financing, corporate lending, or restructuring scenarios where a lender requires security over company shares. The agreement must comply with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and other relevant regulations, particularly regarding perfection requirements and enforcement mechanisms. The document includes specific provisions for pledge creation, perfection steps such as registration with relevant authorities, voting rights arrangements, dividend treatments, and enforcement procedures. Special considerations apply depending on whether the shares are in mainland UAE companies or free zone entities, with additional requirements for public company shares.

What sections should be included in a Share Pledge Agreement?

1. Parties: Identification of the Pledgor(s) and Pledgee(s), including full legal names and addresses

2. Background: Context of the pledge, including reference to any underlying facility or debt agreement

3. Definitions and Interpretation: Key terms used in the agreement, including specific UAE law concepts

4. Grant of Pledge: Core provision creating the security interest over the shares

5. Perfection Requirements: Steps required under UAE law to perfect the pledge, including registration requirements

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 shareholder rights during the pledge period

9. Events of Default: Circumstances triggering enforcement rights

10. Enforcement: Mechanisms for enforcing the pledge in accordance with UAE law

11. Power of Attorney: Irrevocable power of attorney for pledge enforcement

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Confirmation of UAE law application and jurisdiction

What sections are optional to include in a Share Pledge Agreement?

1. Security Agent Provisions: Required when the pledge is held by a security agent for multiple beneficiaries

2. Multiple Pledgors: Additional provisions when shares are pledged by multiple parties

3. Further Assurance: Additional cooperation obligations, particularly relevant for complex corporate structures

4. Currency Provisions: Required when the underlying debt and shares involve different currencies

5. Tax Provisions: Specific tax-related provisions if relevant to the transaction

6. Share Transfer Restrictions: Additional restrictions beyond the pledge itself

7. Tag-Along/Drag-Along Rights: Required when maintaining specific shareholder rights during the pledge period

What schedules should be included in a Share Pledge Agreement?

1. Share Details: Details of pledged shares including share certificates numbers and company information

2. Form of Notice to Company: Template notice to the company regarding the share pledge

3. Form of Acknowledgment: Template company acknowledgment of the pledge

4. Register of Pledge Annotation: Form of annotation required in the company's share register

5. Share Certificates: Copies of relevant share certificates

6. Company Constitutional Documents: Relevant extracts from memorandum and articles of association

7. Powers of Attorney: Forms of powers of attorney required for pledge enforcement

8. Commercial Register Extract: Recent extract showing company and share ownership details

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

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking & Finance

Investment Banking

Private Equity

Corporate Finance

Asset Management

Real Estate

Infrastructure

Manufacturing

Technology

Healthcare

Energy

Telecommunications

Relevant Teams

Legal

Finance

Corporate Finance

Compliance

Risk Management

Treasury

Investment Banking

Credit Risk

Corporate Secretarial

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Corporate Lawyer

Legal Counsel

Investment Manager

Security Trustee

Compliance Officer

Company Secretary

Transaction Manager

Portfolio Manager

Risk Manager

Corporate Finance Manager

Investment Banking Associate

Security Agent

Credit Risk Officer

Industries
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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