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Share Loan Agreement for Hong Kong

Share Loan Agreement Template for Hong Kong

A Share Loan Agreement is a legally binding document governed by Hong Kong law that establishes the terms and conditions under which one party (the lender) agrees to temporarily transfer shares to another party (the borrower). The agreement details the loan terms, including duration, fees, rights and obligations regarding dividends and voting rights, collateral requirements, and termination provisions. It incorporates Hong Kong regulatory requirements, particularly those under the Securities and Futures Ordinance and Companies Ordinance, ensuring compliance with local securities regulations and corporate law.

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Share Loan Agreement

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What is a Share Loan Agreement?

A Share Loan Agreement is utilized when parties wish to establish a temporary transfer of shares, typically for purposes such as short selling, market making, or settlement coverage. This document, governed by Hong Kong law, outlines the comprehensive framework for such transactions, including delivery mechanisms, fee structures, voting rights, dividend treatments, and default provisions. The agreement must comply with Hong Kong's regulatory regime, particularly the Securities and Futures Ordinance and related regulations. It's essential for financial institutions and market participants engaging in securities lending transactions in Hong Kong's financial markets, providing legal certainty and risk management mechanisms for both lenders and borrowers.

What sections should be included in a Share Loan Agreement?

1. Parties: Identifies and defines the Lender and Borrower

2. Background: Sets out the context of the agreement and parties' intentions

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules

4. Loan of Shares: Details the core agreement to lend shares, including quantity and share class

5. Term and Termination: Specifies duration of the loan and termination rights

6. Delivery and Settlement: Procedures for transferring shares at start and end of loan

7. Consideration and Fees: Details any lending fees, charges, and payment terms

8. Rights and Obligations: Parties' responsibilities during the loan period

9. Dividends and Corporate Actions: Treatment of dividends and voting rights during loan period

10. Representations and Warranties: Standard declarations by both parties

11. Events of Default: Circumstances constituting default and consequences

12. Regulatory Compliance: Compliance with relevant Hong Kong regulations

13. Notices: Communication procedures between parties

14. General Provisions: Standard boilerplate clauses including governing law

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

1. Security Arrangements: Required if collateral is provided for the share loan

2. Tax Provisions: Detailed tax arrangements if cross-border elements exist

3. Margin Requirements: Include if ongoing collateral adjustments are required

4. Intermediary Provisions: Required if brokers or agents are involved

5. Market Disruption: Include for handling market disruption events

6. Set-off Rights: Optional provisions for right to set off obligations

7. Substitution Rights: If lender has right to substitute shares

8. Confidentiality: Detailed confidentiality provisions if sensitive information involved

What schedules should be included in a Share Loan Agreement?

1. Schedule 1 - Share Details: Details of shares being loaned including class, quantity, and issuing company

2. Schedule 2 - Fee Schedule: Detailed breakdown of all fees and charges

3. Schedule 3 - Form of Transfer Notice: Standard form for share transfer notifications

4. Schedule 4 - Contact Details: Key contacts and addresses for notices

5. Schedule 5 - Settlement Procedures: Detailed procedures for share transfers and settlements

6. Appendix A - Required Regulatory Disclosures: Standard disclosures required under Hong Kong law

7. Appendix B - Form of Compliance Certificate: Template for periodic compliance certification if required

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

Hong Kong

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions









































Clauses


































Relevant Industries

Financial Services

Investment Banking

Securities Trading

Asset Management

Private Equity

Hedge Funds

Corporate Finance

Banking

Wealth Management

Relevant Teams

Legal

Compliance

Trading

Risk Management

Operations

Finance

Treasury

Corporate Secretariat

Settlements

Investment Management

Regulatory Affairs

Relevant Roles

Legal Counsel

Compliance Officer

Securities Trader

Risk Manager

Portfolio Manager

Corporate Lawyer

Financial Controller

Operations Manager

Investment Manager

Treasury Manager

Chief Financial Officer

Regulatory Affairs Director

Company Secretary

Settlement Officer

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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