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Share Loan Agreement for Canada

Share Loan Agreement Template for Canada

A comprehensive legal agreement governed by Canadian law that establishes the terms and conditions for lending money with shares serving as collateral. The document incorporates requirements from both federal and provincial Canadian securities regulations, addressing aspects such as share transfer restrictions, voting rights, dividend treatments, and enforcement mechanisms. The agreement must comply with provincial Securities Acts, the Canada Business Corporations Act, and relevant Personal Property Security Act provisions, while establishing clear rights and obligations for both the lender and borrower regarding the share collateral.

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Share Loan Agreement

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What is a Share Loan Agreement?

The Share Loan Agreement is a specialized financial instrument used in Canadian business transactions where shares are provided as collateral for a loan. This document is particularly relevant when shareholders need to obtain financing while retaining potential upside in their shares, or when traditional lending options are not suitable. The agreement must navigate both federal and provincial regulatory requirements, including securities laws, corporate legislation, and personal property security regulations. A Share Loan Agreement typically includes detailed provisions on share valuation, maintenance of share value, voting rights during the loan period, dividend treatment, and enforcement mechanisms. It's commonly used in corporate restructuring, investment financing, or when shareholders need liquidity without permanently disposing of their shares. The document must comply with provincial Securities Acts and the Canada Business Corporations Act, while also addressing practical aspects of share transfer and security registration.

What sections should be included in a Share Loan Agreement?

1. Parties: Identification of the Lender and Borrower, including full legal names and addresses

2. Background: Context of the share loan arrangement, including the purpose and basic transaction structure

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

4. Loan Terms: Principal amount, interest rate, term, and repayment provisions

5. Security Over Shares: Details of the share security arrangement, including pledge and charge over the shares

6. Representations and Warranties: Statements of fact and assurances from both parties regarding their capacity, authority, and share ownership

7. Covenants: Ongoing obligations of the parties during the term of the loan

8. Events of Default: Circumstances constituting default and consequences thereof

9. Enforcement Rights: Lender's rights and remedies upon default, including power of sale

10. Voting Rights and Dividends: Treatment of voting rights and dividends during the security period

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

12. General Provisions: Standard boilerplate clauses including governing law, assignment, and amendments

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

1. Guarantee: Required when a third party is guaranteeing the loan obligations

2. Additional Security: Used when other assets besides shares are provided as security

3. Tax Provisions: Detailed tax treatment and obligations when complex tax implications exist

4. Foreign Currency Provisions: Required when loan and repayment are in different currencies

5. Registration Rights: Necessary when shares are subject to registration requirements

6. Tag-Along Rights: Optional protection for minority shareholders in case of share sale

7. Regulatory Compliance: Special provisions for regulated industries or entities

8. Insurance Requirements: When specific insurance coverage is required for the shares or underlying business

What schedules should be included in a Share Loan Agreement?

1. Schedule A - Share Details: Detailed description of the shares including class, number, certificate numbers, and issuing corporation

2. Schedule B - Repayment Schedule: Detailed breakdown of repayment dates and amounts

3. Schedule C - Form of Share Transfer: Standard form for share transfer in case of enforcement

4. Schedule D - Required Authorizations: List of required corporate and regulatory approvals

5. Schedule E - Existing Encumbrances: List of any existing charges or encumbrances on the shares

6. Appendix 1 - Share Certificates: Copies of relevant share certificates

7. Appendix 2 - Corporate Resolutions: Copies of relevant corporate authorizations and resolutions

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions







































Clauses
































Relevant Industries

Financial Services

Banking

Investment Management

Private Equity

Corporate Finance

Securities Trading

Asset Management

Professional Services

Real Estate Investment

Technology

Manufacturing

Retail

Healthcare

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Secretariat

Investment

Credit

Corporate Development

Securities Administration

Relevant Roles

Corporate Lawyer

Finance Director

Investment Manager

Chief Financial Officer

Legal Counsel

Corporate Secretary

Compliance Officer

Risk Manager

Treasury Manager

Portfolio Manager

Investment Banker

Securities Lawyer

Corporate Finance Manager

Credit Risk Officer

Business Development Director

Industries








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