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Share Lending Agreement Template for Belgium

This document is a comprehensive Share Lending Agreement governed by Belgian law and compliant with EU regulations. It establishes the terms and conditions under which one party (the lender) agrees to temporarily transfer shares to another party (the borrower) in exchange for collateral and lending fees. The agreement incorporates specific provisions required under Belgian financial law and EU directives, including the Securities Financing Transactions Regulation (SFTR) and Market Abuse Regulation (MAR). It covers crucial aspects such as delivery mechanisms, collateral requirements, corporate actions, voting rights, and regulatory reporting obligations.

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What is a Share Lending Agreement?

A Share Lending Agreement is a critical financial instrument used to facilitate various market activities, including short selling, settlement coverage, and market making. This agreement, governed by Belgian law and EU regulations, provides a legally robust framework for temporary transfer of shares between institutional parties. It includes detailed provisions for collateral management, corporate actions, regulatory compliance, and operational procedures. The document is particularly important in the Belgian market context, where it must comply with both local financial regulations and broader EU requirements such as SFTR and MAR. The agreement is typically used by financial institutions, investment firms, and institutional investors engaging in securities financing transactions, and includes comprehensive risk management and regulatory reporting provisions.

What sections should be included in a Share Lending Agreement?

1. Parties: Identification of the lender and borrower, including full legal names, registration details, and addresses

2. Background: Context of the agreement and brief description of the parties' intentions

3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and rules of interpretation

4. Loan of Securities: Core provisions regarding the lending of shares, including scope and basic terms

5. Delivery and Return: Procedures and timing for the delivery and return of borrowed securities

6. Collateral Requirements: Details of required collateral, including type, amount, and maintenance requirements

7. Fee Structure: Lending fees, payment terms, and calculation methods

8. Rights and Obligations: Detailed responsibilities of both parties during the lending period

9. Corporate Actions: Handling of dividends, rights issues, and other corporate actions

10. Representations and Warranties: Standard and specific representations made by each party

11. Events of Default: Circumstances constituting default and resulting consequences

12. Termination: Conditions and procedures for terminating the agreement

13. Tax Provisions: Treatment of taxes and manufactured dividends

14. Regulatory Compliance: Obligations regarding regulatory requirements and reporting

15. Governing Law and Jurisdiction: Specification of Belgian law as governing law and jurisdiction provisions

What sections are optional to include in a Share Lending Agreement?

1. Market Disruption: Provisions dealing with market disruption events - include if lending involves volatile or less liquid securities

2. Voting Rights: Specific arrangements for voting rights during lending period - include if voting rights are important to either party

3. Central Counterparty Provisions: Additional provisions when using a central counterparty - include if transactions will be cleared through a CCP

4. Agency Provisions: Additional provisions for agency lending - include if either party acts as an agent

5. Custody Arrangements: Specific provisions regarding custody of securities and collateral - include if using third-party custodian

6. Electronic Trading Platform: Provisions for using electronic trading platforms - include if transactions will be executed electronically

7. Buy-in Procedures: Detailed procedures for buy-in rights - include for higher-risk counterparties or securities

What schedules should be included in a Share Lending Agreement?

1. Schedule 1 - Eligible Securities: List of securities eligible for lending under the agreement

2. Schedule 2 - Eligible Collateral: Types of acceptable collateral and related haircuts

3. Schedule 3 - Fee Schedule: Detailed fee calculations and rates

4. Schedule 4 - Operating Procedures: Detailed operational procedures including settlement instructions

5. Schedule 5 - Form of Loan Confirmation: Template for confirming individual loan transactions

6. Schedule 6 - Contact Details: Contact information for notices and operational matters

7. Appendix A - Standard Settlement Instructions: Detailed settlement instructions for both parties

8. Appendix B - Reporting Requirements: Templates and procedures for regulatory and operational reporting

Authors

Alex Denne

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

Jurisdiction

Belgium

Publisher

Genie AI

Cost

Free to use

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