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Share Loan Agreement for India

Share Loan Agreement Template for India

A comprehensive legal agreement governed by Indian law that establishes the terms and conditions under which a lender provides a loan facility to a borrower, with shares serving as collateral security. The agreement details the loan amount, interest rates, repayment terms, and the mechanism for share pledge, while ensuring compliance with Indian securities regulations, company law, and financial sector requirements. It includes provisions for default scenarios, enforcement mechanisms, and the process for releasing the share pledge upon loan repayment, all within the framework of Indian judicial system and regulatory requirements.

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Share Loan Agreement

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What is a Share Loan Agreement?

The Share Loan Agreement is a vital financial instrument in Indian corporate finance, used when a borrower seeks to obtain financing while using shares as security. This document type is particularly relevant in scenarios involving share-backed financing, corporate restructuring, or when shareholders need liquidity without selling their shareholding. The agreement must comply with multiple Indian regulations including the Companies Act 2013, SEBI regulations, and the Indian Contract Act 1872. It typically includes detailed provisions about the pledge mechanism, voting rights, dividend treatments, and enforcement procedures. The document becomes especially critical in cases of default, as it provides the legal framework for the lender to enforce their security interest in the pledged shares within the Indian legal system.

What sections should be included in a Share Loan Agreement?

1. Parties: Identification of the lender and borrower with full legal names and addresses

2. Background: Context of the transaction, including details of the shares being used as security and the purpose of the loan

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

4. Loan Amount and Purpose: Specification of the loan amount, currency, and permitted use of funds

5. Interest and Repayment: Interest rate, calculation method, payment schedule, and repayment terms

6. Security and Share Pledge: Details of the share pledge arrangement, including number and type of shares

7. Representations and Warranties: Standard and specific representations by both parties regarding their capacity and the shares

8. Covenants: Ongoing obligations of the borrower regarding the shares and loan

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

10. Rights and Remedies: Lender's rights upon default, including share enforcement procedures

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

12. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

13. Boilerplate Provisions: Standard clauses including severability, entire agreement, amendments, etc.

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

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

2. Additional Security: Used when security beyond shares is provided

3. Voting Rights: Needed when specific arrangements regarding share voting rights during the loan period are required

4. Dividend Rights: Include when there are specific arrangements for handling dividends during the loan period

5. Transfer Restrictions: Required when there are additional restrictions on share transfers beyond statutory requirements

6. Insurance: Needed when insurance of the charged shares or other assets is required

7. Costs and Expenses: Detailed section on transaction costs when these are significant or disputed

What schedules should be included in a Share Loan Agreement?

1. Schedule 1 - Share Details: Detailed description of the pledged shares including share certificate numbers, distinctive numbers, and shareholding percentage

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

3. Schedule 3 - Form of Transfer Deed: Pre-signed share transfer forms to be used in case of enforcement

4. Schedule 4 - Corporate Authorizations: Copies of board resolutions and other corporate approvals

5. Schedule 5 - Conditions Precedent: List of documents and conditions to be satisfied before loan disbursement

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

7. Appendix B - Specimen Signatures: Authorized signature specimens of parties

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

India

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions

















































Clauses




































Relevant Industries

Financial Services

Banking

Investment Management

Corporate Finance

Private Equity

Asset Management

Professional Services

Legal Services

Company Secretarial Services

Investment Banking

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Secretarial

Credit

Investment

Corporate Finance

Documentation

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Investment Manager

Credit Manager

Risk Officer

Company Secretary

Compliance Officer

Transaction Manager

Portfolio Manager

Investment Banker

Financial Controller

Treasury Manager

Legal 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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