Enforcing share security

Copyright © 2025 LexisNexis
Published by a LexisNexis Banking & Finance expert
Practice notes

Enforcing share security

Copyright © 2025 LexisNexis

Published by a LexisNexis Banking & Finance expert

Practice notes
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This Practice Note summarises:

  1. •

    the different forms of share security

  2. •

    the main enforcement options open to security takers

  3. •

    practical considerations for security takers in determining the appropriate enforcement mechanics and

  4. •

    a number of further considerations for security takers depending on the context

Forms of share security

There are three main types of security which can be created over shares: (a) charge, (b) legal mortgage and (c) equitable mortgage, which are explored further below.

Historically it was possible to take a pledge over shares. The essence of a pledge is the delivery of the possession of an asset as security for the repayment of a monetary debt and this used to be possible in the case of bearer shares. However from 26 May 2015, section 779 of the Companies Act 2006 was amended and companies are now prohibited from issuing bearer shares. Existing holders of bearer shares were given until 26 February 2016 to surrender and convert them into registered shares (for further information, see News Analysis: Bearer shares—how to avoid a grizzly ending).

Charge

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Jurisdiction(s):
United Kingdom
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