¶¶Òõ¶ÌÊÓƵ

The Loan Against Shares Agreement is a specialized financing document used in the UAE when shares are pledged as security for a loan facility. This agreement is essential for financial institutions and borrowers engaging in share-backed lending transactions within the UAE jurisdiction. The document must comply with various UAE federal laws, including banking regulations, securities laws, and commercial regulations. It typically contains detailed provisions regarding the pledge mechanism, valuation methods, margin maintenance requirements, and enforcement procedures. The agreement becomes particularly relevant in scenarios where companies or individuals seek to leverage their shareholdings for financing while retaining ownership rights, subject to the security interest of the lender. The document must be structured to ensure enforceability under UAE law and often requires registration with relevant authorities such as the Securities and Commodities Authority or relevant stock exchanges.

1. Parties: Identifies the lender, borrower, and any guarantors or security providers

2. Background: Sets out the context of the loan arrangement and the purpose for which the shares are being pledged

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Loan Amount and Purpose: Specifies the loan amount, currency, and permitted use of the loan proceeds

5. Interest and Fees: Details the interest rate, calculation method, payment periods, and any applicable fees

6. Security Arrangements: Describes the share pledge mechanism, perfection requirements, and maintenance of security

7. Representations and Warranties: Sets out the borrower's confirmations regarding their authority, share ownership, and financial condition

8. Covenants: Lists ongoing obligations of the borrower including financial covenants and share maintenance requirements

9. Events of Default: Specifies circumstances constituting default and their consequences

10. Enforcement Rights: Details the lender's rights and remedies upon default, including share disposal

11. Payments and Calculations: Describes payment mechanics, business days, and calculation conventions

12. Duration and Termination: Sets out the term of the agreement and termination provisions

13. Notices: Specifies how formal communications between parties should be made

14. Governing Law and Jurisdiction: Confirms UAE law as governing law and specifies jurisdiction for disputes