To secure an amount that it owes to a creditor, a debtor may give the shares it holds to a third party who acts as an intermediary. Our template sets out the terms of this transaction, which is a movable hypothec with delivery, also called a "pledge."

Generally speaking, a movable hypothec with delivery is created and published at the time of surrendering the property to the creditor, and so drafting a written agreement is not required by law. However, a written agreement is required if delivery is made to a third party.

It is recommended that the terms "deposit" and "depositary" not be used to identify the third party safeguarding the security. Using these terms can affect the interpretation of the contract and lead to confusion because a party can recover possession of a deposited item from a depositary upon demand, making it less reliable than a using a movable hypothec with delivery as security.

We recommend using this share pledge template to document a relationship in which a debtor (the pledgor) pledges (hypothecates) its shares to secure the payment of a sum owed to a creditor by delivering them to a third party custodian.

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Agreement
0.01.02 Breach
0.01.03 Encumber or Encumbrance
0.01.04 Event of Default
0.01.05 Force Majeure
0.01.06 Legal Representatives
0.01.07 PARTY
0.01.08 Person
0.01.09 Primary Agreement
0.01.10 Prime Rate
0.01.11 Promissory Note
0.01.12 Share Certificates
0.01.13 Shares
0.02 Entire Agreement
0.03 Jurisdiction
0.04 Non-Compliance
0.04.01 Severability
0.04.02 Substitute Provision
0.05 Miscellaneous
0.05.01 Cumulative Rights
0.05.02 No Waiver
0.05.03 Time and Days
a) Time of the Essence
b) Computation of Time
c) Delays
0.05.04 Financial References
0.05.05 Cross-References
0.05.06 Gender and Number
0.05.07 Headings
0.05.08 Presumptions
0.05.09 Knowledge
0.05.10 Approval
0.05.11 Accounting Standards
1.00 PURPOSE
1.01 Appointment and Removal
1.01.01 Initial Appointment
1.01.02 Removal
1.01.03 New Appointment
1.01.04 Delivery
1.01.05 Liability
1.02 Creation of Pledge
2.00 CONSIDERATION
2.01 Lump Sum Fee
a) Amount
b) Indexation
2.02 Additional Fees
2.03 Disbursements
2.04 Sharing
3.00 TERMS OF PAYMENT
3.01 Lump Sum Fees
3.02 Additional Fees
3.03 Disbursements
3.04 Interest
3.05 Loss of Term
3.06 Reimbursement of Legal Costs
4.00 SECURITY
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Authority
5.02 Binding Agreement
5.03 Informed Consent
6.00 REPRESENTATIONS AND WARRANTIES OF PLEDGOR
6.01 Status
6.02 Encumbrances
7.00 REPRESENTATIONS AND WARRANTIES OF CREDITOR
8.00 REPRESENTATIONS AND WARRANTIES OF DEPOSITARY
9.00 MUTUAL DUTIES AND OBLIGATIONS
9.01 Representations and Warranties
10.00 DUTIES AND OBLIGATIONS OF PLEDGOR
10.01 Agreement
10.02 Release of Certificates
10.02.01 Upon Signing Agreement
a) Share Certificates
b) Proof of Hypothec
c) Power of Attorney
10.02.02 New Share Certificates
10.03 Exercise of Rights
10.04 Safeguarding Rights
10.05 Disposition
10.06 Encumbrance
10.07 Abandonment in Event of Default
10.08 Remedy
11.00 DUTIES AND OBLIGATIONS OF CREDITOR
11.01 Enjoyment of Rights
11.02 Benefits Attached to Shares
11.03 Discharge
11.04 Redemption of Shares
12.00 DUTIES AND OBLIGATIONS OF DEPOSITARY
12.01 Duties
12.01.01 General
12.01.02 Specific
12.02 Receipt
12.03 Delivery to PLEDGOR
12.03.01 Authorization
12.03.02 Affidavit
12.03.03 Notice of Objection
12.04 Delivery to CREDITOR
12.05 Litigation
12.06 Liability
12.06.01 Acts, Errors and Omissions
12.06.02 Non-Liability
12.06.03 Legal Proceedings
12.06.04 Litigation
12.07 Resignation
13.00 SPECIAL PROVISIONS
13.01 New Issue of Shares
13.01.01 Pre-emptive Right
13.01.02 Exception
13.01.03 Procedure
13.01.04 Default
13.02 Execution of Pledge
13.03 Assignment
13.03.01 Prohibition
13.03.02 Exception
13.04 Force Majeure
13.04.01 No Default
13.04.02 Duty
13.04.03 Rights of Other PARTY
13.05 Rights Attached to Shares
13.06 Remedy in Event of Default
13.06.01 Prior Notice
13.06.02 Registering in RDPRM
13.06.03 Sale
13.06.04 Debt
13.06.05 Shareholder Agreement
13.07 Release of the Shares
13.07.01 Full Payment
13.07.02 Substitution
13.08 Reimbursement of Legal Costs
14.00 GENERAL PROVISIONS
14.01 Notice
14.02 Dispute Resolution
14.02.01 Good Faith Negotiations
14.02.02 Mediation
a) Process
b) Mediator
c) Settlement
d) Legal Proceedings [OR Arbitration]
14.02.03 Arbitration
a) Notice
b) Reply
c) Appointment of a Third Arbitrator
d) Subcontracts
e) Confidentiality
f) Hearing
g) Ruling
h) Costs
i) Supplementary Rules
14.03 Election
14.04 Counterparts
14.05 Amendment
14.06 No Waiver of Rights
14.07 Electronic Transmission
14.08 Language
15.00 TERMINATION
15.01 Mutual Consent
15.02 Without Notice
15.03 Prior Notice (Event of Default)
16.00 EFFECTIVE DATE
17.00 DURATION
17.01 End of Agreement
17.02 Survival
18.00 SCOPE



SCHEDULE A – EXCERPT OF A RESOLUTION OF ............................
SCHEDULE 0.01.11 – PROMISSORY NOTE