Taking security over shares
Taking security over shares

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Taking security over shares
  • Taking security over shares—what is secured?
  • Types of shares
  • Registered shares
  • Certificated shares
  • Uncertificated shares
  • Bearer shares
  • Relevant types of security
  • Mortgage
  • Charge
  • More...

Taking security over shares

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for lending lawyers?

Shares are commonly offered as security for a loan.

In commercial lending transactions, shares are typically offered as security:

  1. as part of a package of security over the whole of a company's assets (see Practice Note: Key features of debentures)

  2. where the borrower is a special purpose vehicle and the lender wants to have the ability to take control of the borrower and its whole business on enforcement (see Real Estate Finance—overview, Practice Note: Security in project finance transactions and Practice Note: Security and guarantees on acquisition and finance transactions), or

  3. for stamp duty or other tax reasons (see Practice Note: What does stamp duty apply to?)

This Practice Note explains the key issues that arise when taking security over shares. In particular it considers:

  1. the types of shares that may be secured

  2. the relevant types of security used

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