Pledging of Shares | What is Pledging of Shares | Pledging of Shares Explained | Samco Securities

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Hello traders, Pledging of shares refers to the process where a shareholder offers their shares in a company as collateral to secure a loan or credit facility from a lender. In this arrangement, the shareholder retains ownership of the pledged shares but transfers temporary control to the lender until the loan is repaid. Pledging shares allows shareholders to access liquidity without selling their ownership stake in the company outright. However, it's crucial to note that if the borrower defaults on the loan, the lender may have the right to sell the pledged shares to recover the outstanding debt. Pledging shares is a common practice among investors seeking financing for various purposes, including business expansion, personal expenses, or investment opportunities.

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