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Membership Interest Pledge Agreement Template for India

A comprehensive security document governed by Indian law that creates a pledge over membership interests (shares) in a company as collateral for securing financial obligations. The agreement is structured in compliance with the Companies Act 2013, SEBI regulations, and other relevant Indian legislation, detailing the terms of the pledge, rights and obligations of the pledgor and pledgee, enforcement mechanisms, and procedures for dealing with the pledged interests. It includes provisions for maintaining the security, voting rights, dividend distributions, and enforcement procedures in case of default.

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Membership Interest Pledge Agreement

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What is a Membership Interest Pledge Agreement?

The Membership Interest Pledge Agreement is a crucial security document used in Indian corporate and financing transactions where a member's interest in a company is offered as collateral for securing financial obligations. This agreement type is commonly utilized in corporate finance, acquisition financing, and general lending scenarios where lenders require security over company shares. The document must comply with Indian legal requirements, including the Companies Act 2013, SEBI regulations, and relevant banking laws. It typically includes detailed provisions regarding the pledge creation, maintenance, voting rights, dividend treatment, and enforcement mechanisms. The agreement becomes particularly important in scenarios involving corporate restructuring, secured lending, or investment transactions where lenders or investors require security over company ownership interests.

What sections should be included in a Membership Interest Pledge Agreement?

1. Parties: Identification of the Pledgor, Pledgee, and the Company whose membership interests are being pledged

2. Background: Context of the pledge agreement, including reference to any underlying obligations or facilities

3. Definitions and Interpretation: Definitions of key terms and rules of interpretation for the agreement

4. Pledge and Security Interest: Core provisions creating the pledge and security interest over the membership interests

5. Secured Obligations: Description of the obligations secured by the pledge

6. Perfection and Protection of Security: Requirements for perfecting the security interest and maintaining its validity

7. Representations and Warranties: Key representations by the Pledgor regarding ownership, authority, and absence of encumbrances

8. Covenants: Ongoing obligations of the Pledgor regarding the pledged interests

9. Voting Rights and Dividends: Provisions governing exercise of voting rights and receipt of dividends during the pledge period

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

11. Enforcement: Rights and remedies of the Pledgee upon default

12. Power of Attorney: Appointment of Pledgee as attorney for enforcement purposes

13. Notices: Process for giving notices under the agreement

14. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

15. Miscellaneous: Standard boilerplate provisions including amendments, waivers, and severability

What sections are optional to include in a Membership Interest Pledge Agreement?

1. Security Margin: Used when the pledge requires maintenance of a specific value ratio between pledged interests and secured obligations

2. Top-up Requirements: Include when additional security may be required based on value fluctuations

3. Inter-creditor Provisions: Required when multiple creditors have security interests in the same membership interests

4. Tax Provisions: Detailed tax provisions when significant tax implications are anticipated

5. Foreign Investment Compliance: Required when either party is a foreign entity, addressing FDI regulations

6. Digital Execution: Include when agreement may be executed electronically

7. Step-in Rights: Used when Pledgee requires right to take control of company management upon default

What schedules should be included in a Membership Interest Pledge Agreement?

1. Schedule 1 - Details of Pledged Interests: Detailed description of the membership interests being pledged, including certificate numbers and percentages

2. Schedule 2 - Form of Notice to Company: Template notice to be sent to the Company regarding the creation of pledge

3. Schedule 3 - Secured Obligations: Detailed description of the underlying obligations being secured

4. Schedule 4 - Company Resolutions: Form of company resolutions approving the pledge and its registration

5. Schedule 5 - Powers of Attorney: Specific powers granted to the Pledgee for enforcement

6. Appendix A - Pledge Recording Requirements: Checklist of requirements for recording the pledge in company records

7. Appendix B - Regulatory Filings: List of required regulatory filings and forms

Authors

Alex Denne

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

Jurisdiction

India

Publisher

Ƶ

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
















































Clauses





























Relevant Industries

Banking and Financial Services

Private Equity

Venture Capital

Corporate Finance

Investment Banking

Real Estate

Infrastructure

Manufacturing

Technology

Professional Services

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Risk Management

Corporate Finance

Investment

Treasury

Corporate Governance

Mergers & Acquisitions

Relevant Roles

Legal Counsel

Corporate Lawyer

Finance Director

Chief Financial Officer

Investment Manager

Company Secretary

Compliance Officer

Transaction Manager

Security Trustee

Corporate Finance Manager

Private Equity Manager

Risk Manager

Portfolio Manager

Managing Director

Chief Legal Officer

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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