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About this template
What is this template?
This is a tripartite agreement between a lender, a borrower, and a pledger for a secured inter-corporate loan. It contains specific provisions for maintaining a percentage margin on the value of pledged shares and mandates the execution of a Demand Promissory Note. It is not an unsecured revolving credit facility.
When should you use it?
Use this document when a company provides a loan to another company and requires listed equity shares from a third-party affiliate as security. Use a standard Loan Agreement if no third-party pledge is involved or a Mortgage Deed if the security is real property.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 1 | Loan and Period | The Lender advances a specific sum in Rupees for a stated period of days starting from the disbursal date. |
| 2 | Interest and Penal Interest | The Borrower must pay a specified percentage of annual interest and additional penal interest in the event of a payment default. |
| 3 | Security and Pledge | The Pledger secures the loan by pledging fully paid-up equity shares of a listed company as detailed in the Annexure. |
| 4 | Margin Maintenance | The Borrower must make good a specified percentage margin upon notice or the Lender may demand immediate full repayment. |
| 7 | Sale of Securities | The Lender may sell or dispose of pledged equity shares in the open market to satisfy outstanding debts if the Borrower defaults. |
| 9 | Demand Promissory Note | The Borrower is required to execute a Demand Promissory Note in favour of the Lender as part of the transaction. |
Who it's for
- an Indian company providing an inter-corporate deposit to another entity within the same group
- a corporate borrower securing a short-term loan through a third-party pledger
- a lender requiring listed equity shares as collateral for corporate financing
How long it runs and how it's signed
Law it's drafted under
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