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Third Party Pledge Agreement Template for England and Wales

A Third Party Pledge Agreement under English and Welsh law is a security document where a party (the pledgor) who is not the principal debtor grants security over specific assets to secure the obligations of another party (the principal debtor) to a creditor (the pledgee). The agreement creates a security interest over specified assets and establishes the terms for enforcement, maintenance, and release of the security.

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What is a Third Party Pledge Agreement?

A Third Party Pledge Agreement is utilized when a party wishes to provide security for another's obligations without being directly liable for the underlying debt. This document, governed by English and Welsh law, details the pledged assets, enforcement mechanisms, and the parties' respective rights and obligations. It's commonly used in corporate finance, family business arrangements, and group company structures where one entity provides security for another's borrowing. The agreement must comply with English law requirements for creating valid security interests and include provisions for registration where required.

What sections should be included in a Third Party Pledge Agreement?

1. 1. Parties: Identification of pledgor, pledgee, and debtor

2. 2. Background: Context of the pledge and underlying debt relationship

3. 3. Definitions: Key terms used throughout the agreement including Secured Obligations, Pledge Assets, and Security Period

4. 4. Pledge: Core provisions creating the security interest, including nature and scope of the pledge

5. 5. Representations and Warranties: Statements about ownership, authority to pledge, and absence of encumbrances

6. 6. Covenants: Ongoing obligations regarding maintenance and preservation of pledged assets

7. 7. Enforcement: Rights and procedures for enforcing the pledge, including events of default

8. 8. Preservation of Security: Provisions ensuring pledge remains effective throughout security period

9. 9. Governing Law and Jurisdiction: Specification of English and Welsh law as governing law and jurisdiction of courts

What sections are optional to include in a Third Party Pledge Agreement?

1. Further Assurance: Additional actions pledgor must take to perfect security, used for complex assets or multiple jurisdictions

2. Power of Attorney: Authority for pledgee to act on pledgor's behalf in specified circumstances

3. Notices: Communication procedures between parties, relevant for complex arrangements

4. Registration Requirements: Specific provisions regarding registration of security, used when pledge requires registration

What schedules should be included in a Third Party Pledge Agreement?

1. Schedule 1 - Pledged Assets: Detailed description and/or list of assets subject to the pledge

2. Schedule 2 - Form of Notice: Template notices for perfecting security and notifying relevant parties

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

4. Appendix A - Asset Documents: Copies of relevant certificates, documentation, or title documents relating to pledged assets

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

England and Wales

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use

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