Obtaining Emergency Arbitral Relief against Offshore Holding Companies
Emergency arbitral relief against offshore holding companies requires combining institutional emergency arbitrator orders with immediate offshore court freezing injunctions.
Share Pledge Agreement
Meaning
Security instruments in corporate finance allow a borrower to pledge shares of a company to a lender as collateral to secure a loan or other credit facility. A share pledge agreement gives the lender a security interest over the shares while allowing the borrower to retain ownership until a default occurs. This agreement is a standard component of structured finance and buyout transactions.
Security Creation
Perfecting the security interest requires the borrower to deliver the share certificates and pre-signed blank transfer forms to the lender. This transfer of control ensures that the lender can rapidly execute the transfer of shares if the borrower fails to meet their financial obligations. The agreement is registered in the company’s internal share registry to give notice to third parties, which prevents the company from registering any other transfers without the lender’s consent.
Enforcement Event
Enforcement of the security interest is triggered by specific events of default, such as non-payment or breach of covenants. Once a default occurs, the lender can execute the pre-signed transfer forms and become the registered owner of the shares.
Control Retention
Before default occurs, the borrower typically retains the right to vote the shares and receive dividends. This allocation of rights ensures that the borrower can continue to run the business without lender interference during the life of the loan. It maintains the economic utility of the underlying asset.