The Share Mortgage Agreement is a crucial document in Canadian corporate finance and secured lending transactions. It is typically used when a shareholder needs to obtain financing while retaining beneficial ownership of their shares, or when a corporation requires additional security for a loan or other obligations. The agreement must carefully balance the rights of the mortgagee to enforce their security interest with the mortgagor's ongoing rights as a shareholder. It needs to comply with federal legislation such as the Bank Act and Canada Business Corporations Act, as well as provincial securities laws and personal property security legislation. The document includes detailed provisions for share certificate handling, registration of security interests, voting rights, dividend treatments, and enforcement mechanisms in case of default.
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1. Parties: Identification of the Mortgagor (share owner), Mortgagee (lender), and the Corporation whose shares are being mortgaged
2. Background: Context of the agreement, including details of the underlying loan or obligation being secured
3. Definitions: Definitions of key terms used throughout the agreement
4. Grant of Security Interest: Creation and nature of the security interest in the shares
5. Secured Obligations: Description of the obligations being secured by the share mortgage
6. Representations and Warranties: Mortgagor's representations regarding share ownership, authority to pledge, and absence of encumbrances
7. Share Certificates and Registration: Requirements for delivery of share certificates and registration of the security interest
8. Dividends and Voting Rights: Treatment of dividends and exercise of voting rights during the security period
9. Covenants: Ongoing obligations of the Mortgagor regarding the shares and corporate matters
10. Events of Default: Circumstances constituting default under the agreement
11. Enforcement Rights: Mortgagee's rights and remedies upon default
12. Notices: Process for giving notices under the agreement
13. General Provisions: Standard contractual provisions including governing law, amendments, and assignment
1. Multiple Shareholders Provisions: Additional provisions when multiple shareholders are involved in the security arrangement
2. Tag-Along Rights: Rights of other shareholders in case of enforcement and sale
3. Corporation's Acknowledgment: Corporation's recognition and consent to the share mortgage
4. Share Transfer Restrictions: Special provisions dealing with existing share transfer restrictions
5. Subordination Provisions: Provisions regarding priority and subordination to other security interests
6. Special Voting Arrangements: Detailed arrangements for exercising voting rights during the security period
7. Insurance Requirements: Provisions regarding insurance of corporate assets or key person insurance
1. Schedule A - Share Description: Detailed description of the mortgaged shares including certificate numbers and class rights
2. Schedule B - Underlying Obligations: Details of the loan or other obligations secured by the share mortgage
3. Schedule C - Corporation Details: Corporate information including articles, by-laws, and existing share transfer restrictions
4. Schedule D - Existing Security Interests: List of any existing security interests or encumbrances on the shares
5. Schedule E - Form of Share Transfer Power: Form of share transfer power to be executed in blank
6. Appendix 1 - Consent Resolution: Board/shareholder resolutions approving the share mortgage
7. Appendix 2 - Corporation's Acknowledgment: Form of corporation's acknowledgment and consent to the share mortgage
Relevant legal definitions
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Relevant Industries
Financial Services
Banking
Investment Management
Private Equity
Corporate Services
Real Estate
Professional Services
Manufacturing
Technology
Retail
Healthcare
Energy
Relevant Teams
Legal
Finance
Corporate Secretariat
Treasury
Risk Management
Compliance
Corporate Finance
Securities Administration
Credit Administration
Investment Management
Relevant Roles
Chief Financial Officer
Corporate Lawyer
Legal Counsel
Finance Director
Corporate Secretary
Investment Manager
Banking Officer
Security Registration Officer
Compliance Officer
Risk Manager
Corporate Finance Manager
Treasury Manager
Company Director
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