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Share Loan Agreement for the United States

Share Loan Agreement Template for United States

A Share Loan Agreement is a legal document used in the United States that establishes the terms and conditions under which shares are pledged as collateral for a loan. The agreement complies with federal securities laws, including the Securities Act of 1933 and Exchange Act of 1934, as well as state-specific regulations and UCC provisions. It details the loan amount, interest rates, repayment terms, security arrangements, and the rights and obligations of both lender and borrower regarding the pledged shares.

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Share Loan Agreement

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What is a Share Loan Agreement?

The Share Loan Agreement serves as a crucial document in securities-based lending transactions within the United States. It is commonly used when shareholders need to access liquidity without selling their shares, enabling them to borrow against their shareholding as collateral. The agreement must comply with both federal and state securities regulations, including SEC requirements and Blue Sky laws. It typically includes detailed provisions on share valuation, maintenance requirements, default scenarios, and the treatment of corporate actions such as dividends and voting rights during the loan period.

What sections should be included in a Share Loan Agreement?

1. Parties: Identification and details of the lender and borrower, including registration numbers and addresses

2. Background: Context of the share loan arrangement and purpose of the agreement

3. Definitions: Key terms used throughout the agreement including Business Day, Event of Default, Security, Shares, etc.

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

5. Security Arrangements: Details of share pledge, perfection requirements, and maintenance of security

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

7. Covenants: Ongoing obligations including maintenance of security value, reporting requirements, and restrictions

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

9. Governing Law: Applicable jurisdiction, dispute resolution mechanisms, and enforcement provisions

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

1. Dividend Rights: Provisions governing the treatment of dividends during the loan period and allocation between parties

2. Voting Rights: Arrangements for the exercise of voting rights attached to the pledged shares

3. Share Substitution: Provisions allowing for substitution of pledged shares under specified conditions

4. Market Price Adjustments: Mechanisms for adjusting collateral based on market value fluctuations

What schedules should be included in a Share Loan Agreement?

1. Schedule of Pledged Shares: Detailed list of shares being pledged including quantity, class, and issuing company

2. Form of Transfer Notice: Standard form for executing share transfers and related documentation

3. Calculation of Interest: Detailed methodology for interest calculations and examples

4. Required Regulatory Notices: Mandatory disclosures and notices required under applicable securities laws

5. Share Certificate Details: Schedule containing copies or details of relevant share certificates

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

United States

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Clauses






























Industries

Federal Securities Laws: Primary federal regulations including Securities Act of 1933, Securities Exchange Act of 1934, Regulation T (margin requirements), and SEC Rules and Regulations that govern securities transactions and trading

Banking and Financial Regulations: Key banking regulations including Federal Reserve Board regulations, Truth in Lending Act (TILA), and Regulation U for loans secured by securities

State Securities Laws: State-specific regulations including Blue Sky Laws, state lending regulations, and state usury laws that govern securities transactions within individual states

Uniform Commercial Code: Particularly Article 8 (Investment Securities) and Article 9 (Secured Transactions) which govern commercial transactions including securities transfers and secured lending

Tax Regulations: Internal Revenue Code provisions, state tax regulations, and considerations for treatment of interest payments and dividend payments during the loan period

Corporate Law: State corporation laws, company bylaws, transfer restrictions, and shareholder agreements that may affect share transfers and loans

Compliance Requirements: Regulatory compliance including anti-money laundering regulations, Know Your Customer (KYC) requirements, and FINRA regulations for broker-dealer involvement

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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