Share pledge (share charge)
What is a share pledge, and why does a lender take security over shares?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A share pledge is security over the shares in a company, usually those a parent holds in the borrower or in an operating subsidiary; in the UK, Australia and New Zealand it is more often documented as a share charge or share mortgage. The lender typically holds the share certificates with signed, undated transfer forms, so that on enforcement it can sell the company whole, or replace its board, rather than break up its assets. Shares rank behind everything the company owes, so a holding-company lender relying on them alone stays structurally subordinated, and usually asks for guarantees and security from the subsidiaries as well.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// WORKED IN
// NEXT TO IT
- Personal guarantee release
- General security agreement (GSA)
- Subordination
- Intercreditor agreement
- Loan to value ratio (LVR)
- Forced-sale value
- PPSR (Personal Property Securities Register)
- Retention of title
- Purchase money security interest (PMSI)
- Preferential creditors
- Letter of comfort
- Cross-guarantee
- Floating charge
- Structural subordination
- Recovery waterfall
- First mortgage
- Pari passu
- Loan to security ratio (LSR)
- Lending value
- All-monies clause
- Valuation reliance letter
- Solicitor's undertaking
- Loss payee (bank's interest noted)
- Liquidation value (orderly and forced)
- Water entitlements (as security)
- Livestock as security
- Specific security agreement (SSA)
- Debenture (security document)
- Step-in rights
- Third-party mortgage
- Limited guarantee
- Upstream guarantee
- Corporate benefit
- Financial assistance (whitewash)
- Deed of priority
- Perfection (security interest)
- Title insurance
- Payout figure (redemption statement)
- Independent legal advice certificate
- Panel valuer
- Desktop valuation
- Partial release (of security)
- Security trustee (security agent)
- Cash cover (cash-collateralised facility)
- Back-to-back loan
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