Loan Against Shares Agreement Template for Philippines

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Key Requirements PROMPT example:

Loan Against Shares Agreement

"I need a Loan Against Shares Agreement for a PHP 50 million facility where a corporate borrower is pledging both common and preferred shares of a publicly listed technology company, with quarterly interest payments and a security margin of 150%."

Document background

The Loan Against Shares Agreement is a specialized financing document used when borrowers seek to obtain loans using their shareholdings as collateral. This agreement is particularly relevant in the Philippine financial market where share-based lending is regulated under the Securities Regulation Code and BSP guidelines. The document is utilized when shareholders need liquidity without selling their shares, enabling them to leverage their equity holdings while maintaining potential upside in the shares. It includes comprehensive provisions for share valuation, margin maintenance, rights and obligations of parties, and enforcement mechanisms in case of default. The agreement must comply with Philippine banking regulations, securities laws, and corporate requirements, particularly regarding share transfers and pledges. It's commonly used by high-net-worth individuals, corporate entities, and investment holding companies seeking financing while retaining beneficial ownership of their shares.

Suggested Sections

1. Parties: Identification of the Lender and Borrower with complete details including registration numbers and addresses

2. Background: Context of the loan agreement, relationship between parties, and purpose of the loan

3. Definitions: Definitions of key terms used throughout the agreement

4. Loan Amount and Purpose: Specifies the principal amount of the loan and its intended use

5. Interest Rate and Calculations: Details of interest rate, calculation method, and payment periods

6. Security and Pledge of Shares: Description of shares being pledged as security, including quantity, class, and issuing company

7. Representations and Warranties: Statements of fact by the Borrower regarding their authority, share ownership, and absence of encumbrances

8. Covenants: Ongoing obligations of the Borrower during the loan term

9. Events of Default: Circumstances that constitute default and trigger enforcement rights

10. Enforcement Rights: Lender's rights and remedies upon default, including share disposal

11. Term and Repayment: Duration of the loan and repayment terms

12. Costs and Expenses: Allocation of transaction costs and ongoing expenses

13. Notices: Process for formal communications between parties

14. Governing Law and Jurisdiction: Specification of Philippine law as governing law and jurisdiction for disputes

15. Execution: Signature blocks and execution formalities

Optional Sections

1. Security Margin and Top-up: Used when the agreement includes provisions for maintaining a minimum security value and requirements for additional collateral

2. Dividend Rights: Include when there are specific arrangements about how dividends on pledged shares will be handled

3. Corporate Actions: Required when addressing rights and procedures regarding corporate actions affecting the pledged shares

4. Insurance: Include if insurance of the pledged shares or related assets is required

5. Share Transfer Restrictions: Used when there are specific limitations on share transfers beyond the standard pledge restrictions

6. Guarantor Provisions: Include when there is a third-party guarantor for the loan

7. Cross-Default: Used when the default under other specified agreements should trigger default under this agreement

8. Rating Trigger: Include if loan terms are affected by credit rating changes of either party

Suggested Schedules

1. Schedule 1 - Share Details: Detailed description of pledged shares including share certificates numbers, distinctive numbers, and corporate details

2. Schedule 2 - Repayment Schedule: Detailed payment schedule including dates, amounts, and breakdown of principal and interest

3. Schedule 3 - Security Margin Calculations: Formula and examples for calculating security margin and top-up requirements

4. Schedule 4 - Form of Transfer Deed: Template for share transfer deed to be used in case of enforcement

5. Schedule 5 - Conditions Precedent: List of documents and conditions required before loan disbursement

6. Appendix A - Corporate Authorizations: Copies of relevant corporate authorizations and board resolutions

7. Appendix B - Share Certificates: Copies of share certificates being pledged

8. Appendix C - Specimen Signatures: Authorized signatures for both parties for documentation 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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Banking

Financial Services

Investment Management

Securities Trading

Corporate Finance

Asset Management

Wealth Management

Private Equity

Stock Brokerage

Investment Banking

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Banking

Credit

Securities Services

Portfolio Management

Operations

Documentation

Relevant Roles

Chief Financial Officer

Treasury Manager

Legal Counsel

Compliance Officer

Risk Manager

Investment Officer

Credit Manager

Corporate Secretary

Finance Director

Relationship Manager

Securities Officer

Portfolio Manager

Loan Officer

Corporate Banking Officer

Financial Controller

Business Development Manager

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Let's create your Loan Against Shares Agreement

Authors

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