Share Pledge Agreement for Australia

Share Pledge Agreement Template for Australia

An Australian law-governed Share Pledge Agreement is a security document that creates a security interest over shares in favor of a lender or security taker. The agreement is governed by the Personal Property Securities Act 2009 (Cth) and the Corporations Act 2001 (Cth), requiring specific provisions for creation, perfection, and enforcement of the security interest. It details the rights and obligations of the pledgor and pledgee, including voting rights, dividend treatment, and enforcement mechanisms, while ensuring compliance with PPSR registration requirements and corporate law obligations.

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What is a Share Pledge Agreement?

A Share Pledge Agreement is a crucial security document used in Australian financing transactions where shares are provided as collateral for securing financial obligations. The agreement creates a security interest under the Personal Property Securities Act 2009 (Cth) and must comply with both PPSA requirements and the Corporations Act 2001 (Cth). It is commonly used in corporate loans, acquisition financing, and investment arrangements where lenders require security over company shares. The document includes detailed provisions on security creation, perfection through PPSR registration, voting rights, dividend treatment, and enforcement mechanisms. It's essential for the agreement to address both security law requirements and corporate law considerations, particularly regarding share transfers and corporate governance.

What sections should be included in a Share Pledge Agreement?

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

2. Background: Explains the context of the pledge, typically referencing the underlying facility or obligation being secured

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles, including PPSA-specific terminology

4. Grant of Security Interest: Creates and defines the security interest in the pledged shares

5. Perfection and Protection of Security: Covers PPSR registration requirements and other perfection steps

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

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

8. Dividends and Voting Rights: Specifies treatment of dividends and exercise of voting rights before and after enforcement

9. Events of Default: Defines circumstances triggering enforcement rights

10. Enforcement: Details enforcement procedures and powers of the pledgee

11. Power of Attorney: Appointment of pledgee as attorney for enforcement purposes

12. Notices: Requirements for giving notices under the agreement

13. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, etc.

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

1. Foreign Party Provisions: Required when any party is foreign, addressing FIRB requirements and cross-border issues

2. Multiple Pledgors: Required when shares are pledged by multiple parties, addressing joint and several liability

3. Security Trustee Provisions: Required when the security is held by a security trustee for multiple beneficiaries

4. Further Advances: Required when the security may secure future obligations or advances

5. Tax Provisions: Detailed tax provisions required for complex corporate structures or international transactions

6. Share Transfer Restrictions: Additional provisions required when there are pre-existing transfer restrictions in shareholders agreements

7. Custody Arrangements: Required when share certificates or other documents are held by a custodian

What schedules should be included in a Share Pledge Agreement?

1. Schedule 1 - Pledged Shares: Details of the pledged shares including share certificate numbers, class, and quantity

2. Schedule 2 - Form of Transfer: Blank share transfer form to be used upon enforcement

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

4. Schedule 4 - Company Acknowledgment: Form of acknowledgment from the company regarding the pledge

5. Schedule 5 - PPSR Registration Details: Details of PPSR registration including timing requirements

6. Appendix A - Board Resolutions: Pro forma board resolutions approving the pledge arrangement

7. Appendix B - Shareholder Resolutions: Pro forma shareholder resolutions if required under constitution

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

Jurisdiction

Australia

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions
Relevant Industries

Financial Services

Banking

Investment Management

Private Equity

Corporate Finance

Real Estate Investment

Infrastructure

Mining and Resources

Technology

Manufacturing

Professional Services

Relevant Teams

Legal

Finance

Corporate Finance

Treasury

Compliance

Risk Management

Company Secretariat

Investment

Credit

Operations

Relevant Roles

Legal Counsel

Corporate Lawyer

Finance Lawyer

Banking Lawyer

Chief Financial Officer

Finance Director

Company Secretary

Security Trustee

Loan Officer

Investment Manager

Transaction Manager

Compliance Officer

Risk Manager

Corporate Finance Manager

Investment Director

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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