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Share Mortgage Agreement Template for Canada

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Key Requirements PROMPT example:

Share Mortgage Agreement

"I need a Share Mortgage Agreement for a technology startup in Ontario, Canada, where 10,000 Class A common shares are being pledged to secure a $500,000 business loan from First Canadian Bank, with special provisions for maintaining voting rights during the mortgage period."

Document background
The Share Mortgage Agreement is a crucial document in Canadian corporate finance and secured lending transactions. It is typically used when a shareholder needs to obtain financing while retaining beneficial ownership of their shares, or when a corporation requires additional security for a loan or other obligations. The agreement must carefully balance the rights of the mortgagee to enforce their security interest with the mortgagor's ongoing rights as a shareholder. It needs to comply with federal legislation such as the Bank Act and Canada Business Corporations Act, as well as provincial securities laws and personal property security legislation. The document includes detailed provisions for share certificate handling, registration of security interests, voting rights, dividend treatments, and enforcement mechanisms in case of default.
Suggested Sections

1. Parties: Identification of the Mortgagor (share owner), Mortgagee (lender), and the Corporation whose shares are being mortgaged

2. Background: Context of the agreement, including details of the underlying loan or obligation being secured

3. Definitions: Definitions of key terms used throughout the agreement

4. Grant of Security Interest: Creation and nature of the security interest in the shares

5. Secured Obligations: Description of the obligations being secured by the share mortgage

6. Representations and Warranties: Mortgagor's representations regarding share ownership, authority to pledge, and absence of encumbrances

7. Share Certificates and Registration: Requirements for delivery of share certificates and registration of the security interest

8. Dividends and Voting Rights: Treatment of dividends and exercise of voting rights during the security period

9. Covenants: Ongoing obligations of the Mortgagor regarding the shares and corporate matters

10. Events of Default: Circumstances constituting default under the agreement

11. Enforcement Rights: Mortgagee's rights and remedies upon default

12. Notices: Process for giving notices under the agreement

13. General Provisions: Standard contractual provisions including governing law, amendments, and assignment

Optional Sections

1. Multiple Shareholders Provisions: Additional provisions when multiple shareholders are involved in the security arrangement

2. Tag-Along Rights: Rights of other shareholders in case of enforcement and sale

3. Corporation's Acknowledgment: Corporation's recognition and consent to the share mortgage

4. Share Transfer Restrictions: Special provisions dealing with existing share transfer restrictions

5. Subordination Provisions: Provisions regarding priority and subordination to other security interests

6. Special Voting Arrangements: Detailed arrangements for exercising voting rights during the security period

7. Insurance Requirements: Provisions regarding insurance of corporate assets or key person insurance

Suggested Schedules

1. Schedule A - Share Description: Detailed description of the mortgaged shares including certificate numbers and class rights

2. Schedule B - Underlying Obligations: Details of the loan or other obligations secured by the share mortgage

3. Schedule C - Corporation Details: Corporate information including articles, by-laws, and existing share transfer restrictions

4. Schedule D - Existing Security Interests: List of any existing security interests or encumbrances on the shares

5. Schedule E - Form of Share Transfer Power: Form of share transfer power to be executed in blank

6. Appendix 1 - Consent Resolution: Board/shareholder resolutions approving the share mortgage

7. Appendix 2 - Corporation's Acknowledgment: Form of corporation's acknowledgment and consent to the share mortgage

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Relevant Industries

Financial Services

Banking

Investment Management

Private Equity

Corporate Services

Real Estate

Professional Services

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Relevant Teams

Legal

Finance

Corporate Secretariat

Treasury

Risk Management

Compliance

Corporate Finance

Securities Administration

Credit Administration

Investment Management

Relevant Roles

Chief Financial Officer

Corporate Lawyer

Legal Counsel

Finance Director

Corporate Secretary

Investment Manager

Banking Officer

Security Registration Officer

Compliance Officer

Risk Manager

Corporate Finance Manager

Treasury Manager

Company Director

Securities Lawyer

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