Share Security Agreement for Canada

Share Security Agreement Template for Canada

A Share Security Agreement under Canadian law is a formal legal document that creates a security interest over shares in favor of a secured party. The agreement is governed by both federal and provincial legislation, including the Personal Property Security Act (PPSA) and relevant securities laws. It details the terms and conditions under which shares are pledged as collateral, including enforcement rights, voting rights, dividend entitlements, and the mechanics of the security arrangement. The document must comply with Canadian corporate law requirements and provincial registration requirements for perfection of the security interest.

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What is a Share Security Agreement?

A Share Security Agreement is utilized when a party needs to pledge shares as collateral for a loan or other obligations in Canada. This document is essential in various financing transactions, including corporate loans, acquisition financing, and personal lending arrangements where shares serve as security. The agreement must comply with Canadian federal and provincial requirements, particularly the Personal Property Security Act (PPSA) and relevant securities legislation. It includes crucial details about the pledged shares, the secured obligations, enforcement mechanisms, and the rights and obligations of both the pledgor and secured party. The document is particularly important in the Canadian context due to specific registration requirements and the need to perfect security interests under provincial legislation.

What sections should be included in a Share Security Agreement?

1. Parties: Identifies the pledgor (security provider) and the secured party, including full legal names and addresses

2. Background: Describes the context of the security agreement, including reference to any underlying obligations being secured

3. Definitions and Interpretation: Defines key terms used throughout the agreement and sets out interpretation rules

4. Grant of Security Interest: Core provision creating the 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 status of shares

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

8. Rights and Obligations: Details voting rights, dividends, and other share-related rights during the security period

9. Default and Enforcement: Specifies events of default and enforcement mechanisms

10. Power of Attorney: Appointment of secured party as attorney for enforcement purposes

11. Further Assurance: Obligation to execute additional documents if needed

12. Notices: Communication procedures between parties

13. Assignment and Transfer: Rules regarding transfer of rights under the agreement

14. Governing Law and Jurisdiction: Specifies applicable law and courts

15. Execution: Signature blocks and execution requirements

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

1. Security Registration: Required if PPSA or other registrations are needed in specific jurisdictions

2. Intercreditor Provisions: Required if multiple secured parties have interests in the shares

3. Foreign Law Considerations: Required if shares are of a foreign company or foreign law applies

4. Tax Provisions: Required if specific tax implications need to be addressed

5. Regulatory Compliance: Required if specific regulatory approvals or notifications are needed

6. Share Transfer Restrictions: Required if there are specific restrictions on share transfer in constituent documents

7. Digital Securities Provisions: Required if shares are held in digital form or through a clearing system

What schedules should be included in a Share Security Agreement?

1. Schedule of Pledged Shares: Details of shares being pledged including class, number, and certificate numbers

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

3. Form of Share Power: Document authorizing transfer of shares upon enforcement

4. Shareholders' Resolutions: Any required corporate approvals for the pledge

5. Director Resolutions: Board approvals for the share pledge

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

7. Company Acknowledgment: Form of acknowledgment from the company regarding the pledge

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

Canada

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking

Financial Services

Private Equity

Investment Management

Corporate Finance

Manufacturing

Technology

Real Estate

Energy

Infrastructure

Healthcare

Retail

Professional Services

Mining

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Secretariat

Investment

Credit

Corporate Development

Mergers & Acquisitions

Relevant Roles

Chief Financial Officer

Corporate Lawyer

Finance Director

Treasury Manager

Legal Counsel

Corporate Secretary

Security Trustee

Compliance Officer

Risk Manager

Investment Manager

Banking Relationship Manager

Portfolio Manager

Credit Risk Officer

Financial Controller

Company 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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