Share Mortgage Agreement for New Zealand

Share Mortgage Agreement Template for New Zealand

A comprehensive security agreement governed by New Zealand law that creates a security interest over shares in favor of a mortgagee. The agreement details the terms and conditions under which shares are provided as collateral, including the secured obligations, representations and warranties, covenants, enforcement rights, and regulatory compliance requirements. It incorporates key provisions from New Zealand's Financial Markets Conduct Act 2013, Companies Act 1993, and Personal Property Securities Act 1999, ensuring the security interest is properly created, perfected, and enforceable under New Zealand law.

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What is a Share Mortgage Agreement?

The Share Mortgage Agreement is a crucial security document used in New Zealand when shares are offered as collateral to secure financial obligations. This document is commonly utilized in corporate financing arrangements, acquisition financing, or general lending scenarios where traditional asset security may be unavailable or insufficient. The agreement must comply with New Zealand's robust regulatory framework, including the Financial Markets Conduct Act 2013, Companies Act 1993, and Personal Property Securities Act 1999. It contains detailed provisions regarding the creation and enforcement of the security interest, rights and obligations of both parties, and mechanisms for dealing with the secured shares. The document is particularly important in protecting the mortgagee's interests while ensuring fair treatment of the mortgagor's rights as a shareholder.

What sections should be included in a Share Mortgage Agreement?

1. Parties: Identifies and defines the Mortgagor (share owner) and Mortgagee (security holder), including full legal names and addresses

2. Background: Sets out the context of the agreement, including details of the underlying obligation being secured and why the share mortgage is being granted

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

4. Grant of Security: Creates and defines the security interest over the shares, including the specific rights being granted

5. Secured Obligations: Defines the obligations being secured by the share mortgage, including any monetary amounts

6. Representations and Warranties: Mortgagor's confirmations regarding share ownership, authority to grant security, and absence of encumbrances

7. Covenants: Ongoing obligations of the Mortgagor regarding the shares, including maintenance of value and restrictions on dealing

8. Rights and Powers of the Mortgagee: Details the Mortgagee's rights over the shares, including voting rights and dividend entitlements

9. Events of Default: Specifies circumstances constituting default and triggering enforcement rights

10. Enforcement: Sets out the Mortgagee's enforcement rights and processes following an Event of Default

11. Power of Attorney: Appointment of Mortgagee as Mortgagor's attorney for security purposes

12. General Provisions: Standard contractual provisions including notices, amendments, governing law, and jurisdiction

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

1. Multiple Mortgagors: Required when multiple shareholders are granting security over their shares, defining joint and several liability

2. Cross-Collateralization: Needed when the share mortgage secures obligations under multiple facilities or agreements

3. Regulatory Compliance: Special provisions required for regulated entities or when specific regulatory approvals are needed

4. Priority Arrangements: Required when there are multiple security interests over the shares or priority arrangements with other creditors

5. Share Transfer Mechanics: Detailed provisions for share transfers in enforcement scenarios, particularly relevant for complex share structures

6. Dividend and Distribution Rights: Specific arrangements for handling dividends and distributions during the security period

What schedules should be included in a Share Mortgage Agreement?

1. Schedule 1 - Share Details: Details of the mortgaged shares including share certificate numbers, class, and percentage of total issued shares

2. Schedule 2 - Secured Obligations: Detailed description of the secured obligations, including facility agreements or other underlying obligations

3. Schedule 3 - Company Details: Information about the company whose shares are being mortgaged, including constitution and shareholding restrictions

4. Schedule 4 - Form of Transfer: Pro forma share transfer form for use in enforcement

5. Appendix A - Board Resolution: Copy of board resolution approving the share mortgage (if required by company constitution)

6. Appendix B - Shareholder Resolutions: Any required shareholder approvals or waivers of pre-emptive rights

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

New Zealand

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant Industries

Banking and Financial Services

Investment Banking

Corporate Finance

Private Equity

Venture Capital

Professional Services

Legal Services

Asset Management

Commercial Lending

Business Services

Relevant Teams

Legal

Finance

Corporate Finance

Compliance

Risk Management

Credit

Investment

Company Secretariat

Treasury

Portfolio Management

Relevant Roles

Legal Counsel

Corporate Lawyer

Finance Manager

Chief Financial Officer

Investment Manager

Credit Manager

Compliance Officer

Company Secretary

Transaction Manager

Security Trustee

Portfolio Manager

Risk Manager

Banking Relationship Manager

Corporate Finance 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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