Share Charge Agreement Template for England and Wales

A Share Charge Agreement is a security document governed by English and Welsh law that creates a charge over shares in favor of a lender or security trustee. It forms part of a wider security package in financing transactions, enabling the chargee to take control of and potentially sell the charged shares upon a default event. The document includes detailed provisions on the creation and perfection of security, representations and warranties, covenants, and enforcement mechanisms, all structured within the framework of English law requirements for financial collateral arrangements.

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What is a Share Charge Agreement?

A Share Charge Agreement is commonly used in secured lending transactions where shares serve as collateral. It is particularly relevant in acquisition finance, corporate lending, and investment scenarios under English and Welsh law. The document establishes the security interest over shares, specifies the rights and obligations of both parties, and sets out the enforcement mechanism. It must comply with the Companies Act 2006 and Financial Collateral Arrangements Regulations, including registration requirements at Companies House. The agreement typically forms part of a larger security package and may be accompanied by stock transfer forms and notices to the company whose shares are being charged.

What sections should be included in a Share Charge Agreement?

1. Parties: Identification of the chargor and chargee with full legal details

2. Background: Context of the charge and related transactions

3. Definitions and Interpretation: Key terms and interpretation provisions

4. Creation of Security: Core charging provisions and scope of security

5. Representations and Warranties: Chargor's confirmations regarding ownership and authority

6. Covenants: Ongoing obligations of the chargor

7. Enforcement: Rights and remedies upon default

8. Power of Attorney: Appointment of chargee as attorney

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

1. Further Assurance: Additional security perfection requirements - include when additional security documents may be needed

2. Currency Provisions: Currency conversion and payment provisions - include when dealing with multiple currencies

3. Tax Gross-up: Tax-related payment obligations - include when tax implications need specific addressing

What schedules should be included in a Share Charge Agreement?

1. Schedule 1 - Charged Shares: Details of shares subject to the charge

2. Schedule 2 - Form of Stock Transfer Form: Standard form for share transfers

3. Schedule 3 - Form of Notice to Company: Standard notice informing company of the charge

4. Schedule 4 - Rights and Remedies: Detailed enforcement provisions

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

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use

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