Security Package & Loan Documentation
Share Pledges in Ship Finance
Summary
A share pledge grants security over shares in a vessel-owning company or its holding vehicle, potentially allowing a lender to gain control or realise value on default.
Why this matters in ship finance
It may supplement ship-mortgage enforcement, especially where an orderly corporate sale is preferable to a judicial vessel sale.
The concept
The pledged shares, voting rights, dividends, transfer limits and enforcement triggers are defined by the pledge and law of the company and relevant securities. Ownership of pledged shares does not itself erase underlying liabilities.
How it is used in practice
Validate share registers, corporate approvals, prior encumbrances, local formalities and the interface with management and regulatory consents.
Practical issues
Share foreclosure can carry corporate liabilities and may require competition, sanctions or flag approvals. Do not assume a share pledge is equivalent to vessel title.
How ShipFinance.ai uses this concept
Provide an entity ownership diagram and recovery comparison between asset sale and share enforcement.
Key takeaways
- Share and vessel security secure different assets
- Control rights may require further formalities
- Corporate liabilities survive a share sale