What's the difference between perfection by possession and perfection by control for securities?
For certificated securities, perfection is achieved by the secured party taking possession of the physical certificates along with executed stock powers. For uncertificated securities held in a securities account, perfection requires control under UCC Section 9-106, typically through a control agreement where the securities intermediary agrees to follow the secured party's instructions without further consent from the pledgor. CaseMark generates appropriate perfection provisions based on whether your securities are certificated or held in accounts.
How does CaseMark handle the description of pledged securities?
CaseMark extracts detailed securities information from your uploaded documents including issuer names, certificate numbers, share quantities, CUSIP identifiers, account numbers, and securities intermediary information. The platform creates comprehensive collateral descriptions that satisfy UCC requirements and includes all proceeds, distributions, dividends, and substitutions. It also generates schedules listing all pledged securities with their identifying information.
What remedies does a pledge agreement provide upon default?
Upon default, the pledgee can exercise all UCC Article 9 remedies including selling the securities through public or private sales, on exchanges, or through broker-dealers. The agreement must specify commercially reasonable disposition procedures, notice requirements, and application of proceeds. CaseMark includes comprehensive remedy provisions covering the pledgee's right to sell, credit bid, exercise voting rights, and apply proceeds first to expenses and then to the secured obligations, while preserving the pledgor's redemption rights.
How are voting rights and dividends handled in a securities pledge?
Typically, the pledgor retains voting rights and the right to receive dividends while no default exists, but these rights shift to the pledgee upon default. CaseMark generates provisions that clearly allocate these rights, specify the mechanism for transferring voting control upon default, and address whether pledgee consent is required for extraordinary corporate actions like mergers or amendments to organizational documents.
Does the pledge agreement need to address margin requirements or loan-to-value ratios?
For publicly traded securities subject to market fluctuations, pledge agreements typically include financial covenants requiring maintenance of specified loan-to-value ratios. CaseMark incorporates margin maintenance provisions, valuation procedures using market prices or independent appraisals, and remedies if values fall below required thresholds, such as requiring additional collateral or principal payments to restore adequate coverage.