The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
A pledge is one of the four types of security recognised under English law; the types of security are described in Practice Note: Types of security.
This Practice Note explains:
what a pledge is
the type of interest created by a pledge
the type of assets which can be pledged
how to perfect a pledge
priority issues in relation to pledges, and
how to enforce a pledge
For ease of reference, in this Practice Note:
the 'pledgor' refers to the party providing the pledge (which may in practice be the borrower or a third party security provider)
the 'pledgee' refers to the party to which the pledge is granted (which, in practice, is likely to be the lender or possibly a security agent), and
the 'secured obligations' refers to the obligations expressed to be secured by the pledge (eg the obligations of a borrower to a lender under a facility agreement)
For an explanation of some of the key reasons why a lender might want to take security for a borrower's obligations under a loan, see Why do lenders take security?
A pledge is a type of security interest created:
by transferring the possession of an asset
by way of security for a debt or the discharge of obligations
with an intent to pledge
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