Can I pledge my LLC share as loan security?

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Accepted Answer

To a fellow shareholder, yes. To an outsider — only with the company’s consent. Inside To another shareholder — available by right. Outside To a third party — only if the charter does not forbid it, and with the company’s consent by majority vote; the pledger’s own votes do not count. Seized A creditor cannot simply take it — execution against a share for the shareholder’s debts runs through court, and the company or the others may pay out its value instead. A share can secure a debt: pledging it to another shareholder is a right, and pledging it to a third party requires that the charter not forbid it and that the general meeting consent by a majority of all votes, the pledging shareholder not voting. The pledge is a lien, not a transfer — the pledgee does not become a shareholder. If a shareholder’s personal creditors come for the share, the law protects the company’s composition first: execution requires a court decision and the exhaustion of other assets, the company or the remaining shareholders may satisfy the creditors with the share’s actual value, and only failing that does the share go to auction.

Can I pledge my LLC share as loan security?

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