Share Loan Agreement for Germany

Share Loan Agreement Template for Germany

A Share Loan Agreement under German law is a sophisticated financial instrument that enables the temporary transfer of shares from a lender to a borrower in exchange for collateral and/or fees. The agreement is governed by German securities regulations and financial services laws, including the Securities Trading Act (WpHG) and the German Civil Code (BGB). It details the terms and conditions of the share loan, including transfer mechanisms, voting rights, corporate actions, fee structures, and return obligations, while ensuring compliance with German regulatory requirements and market practices.

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What is a Share Loan Agreement?

The Share Loan Agreement serves as a crucial document in German financial markets, facilitating securities lending transactions between financial institutions, investment firms, and corporate entities. This agreement type is commonly used for various purposes, including short selling, settlement coverage, and market-making activities. Under German law, it must comply with specific regulatory requirements, including the Securities Trading Act (WpHG), Banking Act (KWG), and Safe Custody Act (Depotgesetz). The agreement comprehensively addresses share transfer mechanics, collateral requirements, voting rights, corporate actions, dividend treatments, and fee structures, while incorporating necessary safeguards and risk management provisions required by German financial regulations.

What sections should be included in a Share Loan Agreement?

1. Parties: Identification of the Lender and Borrower with their full legal details

2. Background: Context of the agreement and brief description of the parties' intentions

3. Definitions and Interpretation: Definitions of key terms used throughout the agreement and rules of interpretation

4. Loan of Shares: Core terms of the share loan, including identification of shares, quantity, and transfer mechanisms

5. Term and Termination: Duration of the loan and circumstances under which it can be terminated

6. Delivery and Return: Procedures for the initial delivery of shares and their return at termination

7. Lending Fee and Costs: Details of fees payable for the share loan and allocation of transaction costs

8. Rights and Obligations During Loan Period: Parties' rights and obligations while shares are on loan, including voting rights and corporate actions

9. Representations and Warranties: Standard and specific representations and warranties from both parties

10. Tax Provisions: Treatment of tax matters, including responsibility for withholding taxes and tax indemnities

11. Events of Default: Circumstances constituting default and consequential rights of the parties

12. Notices: Process and requirements for formal communications between parties

13. Governing Law and Jurisdiction: Confirmation of German law governance and jurisdiction for disputes

14. Miscellaneous: Standard boilerplate provisions including severability, entire agreement, and amendments

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

1. Collateral Arrangements: Details of any collateral requirements and management - include if collateral is required to secure the borrower's obligations

2. Multiple Borrowers: Additional provisions for cases involving multiple borrowers - include if more than one borrower is party to the agreement

3. Market Disruption: Provisions dealing with market disruption events - include for longer-term loans or in volatile markets

4. Agency Provisions: Additional terms for cases where either party acts as agent - include if any party is acting in an agency capacity

5. Set-off Rights: Detailed set-off provisions - include if parties have multiple trading relationships

6. Electronic Trading Platform: Provisions for loans executed through electronic platforms - include if relevant to the trading relationship

What schedules should be included in a Share Loan Agreement?

1. Schedule 1 - Form of Loan Notice: Standard form for requesting and confirming individual loan transactions

2. Schedule 2 - Eligible Shares: List and details of shares eligible for lending under the agreement

3. Schedule 3 - Fee Schedule: Detailed breakdown of lending fees and calculation methodologies

4. Schedule 4 - Settlement Instructions: Detailed instructions for share transfers and payments

5. Schedule 5 - Contact Details: List of authorized representatives and contact information for both parties

6. Appendix A - Required Documentation: List of documents required for regulatory compliance and due diligence

7. Appendix B - Tax Documentation: Forms and certificates required for tax purposes

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

Germany

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking

Financial Services

Investment Management

Securities Trading

Asset Management

Corporate Finance

Investment Banking

Private Equity

Hedge Funds

Securities Lending

Relevant Teams

Legal

Compliance

Securities Trading

Risk Management

Operations

Treasury

Portfolio Management

Securities Lending

Settlement

Corporate Finance

Documentation

Trading

Collateral Management

Relevant Roles

Legal Counsel

Securities Trading Manager

Compliance Officer

Risk Manager

Securities Operations Manager

Portfolio Manager

Trading Desk Manager

Securities Lending Specialist

Corporate Finance Director

Treasury Manager

Investment Manager

Prime Brokerage Manager

Collateral Manager

Settlement Officer

Legal 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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