Share Pledges

Overview

A share pledge is a form of security where a shareholder (the pledgor) uses their shares as collateral to secure an obligation, typically a loan, to a creditor (the pledgee). The pledgor delivers the share certificates to the pledgee but retains ownership and, depending on the pledge agreement, voting rights and the right to receive dividends.

The platform allows you to record and manage share pledges, track their status, enforce restrictions, and maintain accurate records of all pledged certificates.

What you'll learn:

How to create a share pledge in the platform
How to manage pledge status and restrictions
How the platform displays warnings for pledged shares
How to resolve pledges and lift restrictions

You can create a new pledge from multiple locations within the platform, ensuring a flexible workflow.

Navigate to the company's Share Certificates tab
Select one or more certificates belonging to the same stakeholder using the checkboxes
Click the Actions button and select Pledge Certificates

Method 2: From a Single Certificate View

Open the detailed view for a specific share certificate
Click the Pledge Certificate button, typically located in the top-right action menu

Method 3: From the Dashboard

Click the global + New button on the main dashboard
Select Pledge from the dropdown menu
Select the Pledgor (the stakeholder whose shares will be pledged)
Select the certificate(s) to pledge from the list of available certificates

Tip

If you start from the dashboard, you'll first select the pledgor, which then populates a list of their available certificates. If you start from a certificate view or list, the pledgor and certificate(s) will be pre-selected.

Completing the Pledge Form

Regardless of the starting point, you'll be guided through a consistent "Create New Pledge" form with the following fields:

Required Information

Pledgee: Select an existing stakeholder or create a new one (the person/entity receiving the pledge)
Pledge Agreement Date: The date the pledge agreement was signed
Secured Obligation: A text field to describe the debt or obligation being secured (e.g., "Loan Agreement dated [Date]")
Secured Amount: The value of the obligation (e.g., €100,000)
Pledge Status: A dropdown menu with options:
- Active (Default)
- Resolved
- Expired
- Enforced

Optional Information

Expiry Date: The date the pledge is set to expire (optional)
Expiry Reminder: (Visible if Expiry Date is set) A dropdown to set a reminder (e.g., 1 week before, 2 weeks before, 1 month before)
Resolution Date: A read-only field that is automatically populated when the pledge is resolved

Document Upload

Upload relevant documents, such as:

Signed Share Pledge Agreement
Notice of Pledge given to the company
Certificate of Memorandum of Pledge

Restrictions

Define the restrictions imposed by the pledge using checkboxes:

Restrict Transfer of Shares (Selected by default) – Prevents transfers of pledged certificates
Restrict Voting Rights – Restricts voting rights on pledged shares
Restrict Dividend Payments – Restricts dividend payments on pledged shares

Tip

The "Restrict Transfer of Shares" option is selected by default. This prevents any transfers of the pledged certificates while the pledge is active. You can uncheck this if transfers are allowed under the pledge agreement.

Step 4: Review and Save

Review all pledge information carefully
Verify the selected certificates and pledgor
Confirm the restrictions are set correctly
Upload any relevant documents
Click Save or Create to complete the pledge

The pledge has been created. The certificates are now marked as pledged, restrictions are enforced, and warning banners are displayed throughout the platform.

Viewing and Managing Pledges

Pledges Tab

A Pledges tab is available in the company's main navigation. This contains a table with the following information:

Pledgee – The entity receiving the pledge
Pledgor(s) – The stakeholder(s) whose shares are pledged
No. of Certificates Pledged – Number of certificates in the pledge
Secured Amount – The value of the secured obligation
Status – Current status (Active, Resolved, Expired, Enforced)
Pledge Date – Date the pledge was created
Expiry Date – When the pledge expires (if set)
Resolution Date – When the pledge was resolved (if applicable)
Actions – View, Edit, Resolve Pledge, Download Documents

Visual Warnings and Indicators

The platform displays clear visual indicators to ensure users are always aware of pledged shares.

When viewing the details of a certificate that is part of an active pledge, a prominent warning banner is displayed at the top:

⚠️ PLEDGED CERTIFICATE: This certificate is currently pledged to [Pledgee Name] as of [Pledge Date]. Transfer is restricted. [View Pledge Details]

Stakeholder Profile

When viewing the profile of a stakeholder who has pledged their certificates, a similar banner appears:

⚠️ PLEDGED SHARES: This stakeholder has pledged [Number] certificate(s). [View Pledges]

Cap Table

In the main capitalization table, any certificate that is pledged will have a small "locked" icon (🔒) next to its certificate number.

Functionality and Restrictions

Preventing Prohibited Actions

The platform enforces the restrictions defined in the pledge. If you attempt to initiate a transfer for a certificate that is part of an active pledge with the "Restrict Transfer of Shares" option enabled, the system will prevent the action.

A modal window will appear with the following message:

Transfer Prohibited

Certificate [Certificate Number] cannot be transferred because it is subject to an active pledge that restricts transfers.

To proceed with the transfer, the pledge must be marked as "Resolved" or "Expired".

[View Pledge Details] [Cancel]

The button to proceed with the transfer will be disabled.

Important

Pledged shares with transfer restrictions cannot be transferred while the pledge is active. You must resolve or expire the pledge first to lift the restrictions.

Managing Pledge Status

The status of a pledge can be changed either through manual action or automatically based on its expiry date.

Resolving a Pledge Manually

To allow for the transfer of previously pledged shares, you can manually resolve the pledge:

Navigate to the Pledges tab
In the row for the relevant pledge, click the Resolve Pledge button in the "Actions" column
A confirmation modal will appear. Upon confirmation:
- The Pledge Status is changed to Resolved
- The Resolution Date is automatically recorded with the current date

Once the pledge is no longer Active, all associated restrictions will be lifted automatically, the warning banners will be removed, and the shares can be transferred freely.

Automatic Expiry and Reminders

The system automatically manages pledges that have a specified expiry date:

Automatic Status Change: A daily automated check runs. If a pledge's Expiry Date has passed and its status is still Active, the system will automatically change the status to Expired
Notifications: When a pledge's status is automatically changed to Expired, a notification will be sent to the relevant users (e.g., the corporate administrators)
Reminders: If you have set an Expiry Reminder, the system will send a notification at the specified time (e.g., 1 week) before the Expiry Date, prompting you to take action if necessary

Tip

Set expiry reminders to ensure you're notified before pledges expire, allowing you to take appropriate action if needed.

A share pledge allows a shareholder to use their shares as collateral while retaining ownership. The platform tracks these pledges and enforces restrictions to ensure compliance with the pledge agreement.

Ownership Retained – The pledgor remains the registered owner of the shares
Restrictions Applied – Transfer, voting, or dividend restrictions may be enforced based on the pledge agreement
Visual Indicators – Warning banners and icons are displayed throughout the platform
Transfer Prevention – Transfers are blocked for certificates with active transfer restrictions
Status Tracking – Pledge status is tracked and can be automatically updated on expiry

Pledge Statuses

Active: The pledge is currently in effect and restrictions are enforced
Resolved: The pledge has been resolved and all restrictions are lifted
Expired: The pledge has expired (automatically or manually) and restrictions are lifted
Enforced: The pledge has been enforced (shares transferred to pledgee due to default)

Practical Example

What Happens Next

After creating a share pledge:

The certificates are marked as pledged in the system
Visual warnings are displayed on certificates and stakeholder profiles
Restrictions are enforced based on the pledge settings
The pledge appears in the Pledges tab with all relevant details
Transfer attempts are blocked if transfer restrictions are enabled
Expiry reminders are scheduled (if set)
Documents are stored and accessible from the pledge record

Next Steps

After creating a pledge, you may need to: - Verify that warning banners are displayed correctly - Test that transfer restrictions are working as expected

Set up expiry reminders if the pledge has an expiry date - Upload any additional documents related to the pledge - Monitor the pledge status and expiry dates

Share Certificates – Understand how share certificates work
Share Certificate Split – Learn how to split certificates before pledging
Transfer of Shares – Learn about share transfers (restricted for pledged shares)
Cap Table – View how pledged shares are indicated in the cap table

Example: Creating a Pledge

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