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The Pledge of Shares Agreement is a fundamental security document used in Hong Kong to create a security interest over shares in a company. It is commonly employed in financing transactions, corporate restructurings, and as part of larger security packages. The document is essential when shareholders wish to use their shares as collateral for loans or other obligations, particularly in corporate finance, acquisition financing, or general corporate borrowing scenarios. The agreement must comply with Hong Kong legal requirements, including the Companies Ordinance and Securities and Futures Ordinance, and typically includes provisions for share transfer restrictions, voting rights, dividend arrangements, and enforcement procedures. The document becomes particularly crucial in default scenarios, providing the security taker with clearly defined rights and mechanisms to enforce their security interest over the pledged shares.

1. Parties: Identifies the pledgor(s), pledgee(s), and the company whose shares are being pledged

2. Background: Sets out the context of the pledge, including reference to any underlying facility or obligation being secured

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles for the agreement

4. Creation of Pledge: Details the creation and nature of the security interest over the shares

5. Pledgor's Representations and Warranties: Key representations regarding ownership, authority to pledge, and status of shares

6. Pledgor's Covenants: Ongoing obligations of the pledgor regarding the pledged shares

7. Rights and Obligations During Security Period: Governs voting rights, dividends, and other corporate actions during the pledge period

8. Events of Default: Defines circumstances constituting default under the agreement

9. Enforcement: Sets out enforcement rights and procedures following an event of default

10. Power of Attorney: Appointment of pledgee as attorney for enforcement purposes

11. Further Assurance: Obligation to execute additional documents and take necessary actions

12. Notices: Communication procedures between parties

13. Assignment and Transfer: Rights and restrictions regarding transfer of rights under the agreement

14. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, amendments