Can I use my shares in a private company as security for a loan?

Yes, by granting a share charge to the lender. But most private company articles restrict transfers and let the directors refuse to register them, which undermines the lender's ability to enforce. Lenders will usually require the articles to be amended before they accept the shares as security.

What changes do lenders ask for in the articles?

Typically that the directors must register a transfer to the lender, its nominee or a buyer on enforcement, and that pre-emption rights and other transfer restrictions do not apply to those transfers. The changes should be limited to the charge so that ordinary transfers remain restricted.

How are the articles amended?

By a special resolution of the shareholders, passed by at least 75 per cent of the votes, at a general meeting or by written resolution. The resolution and the amended articles must be filed at Companies House within 15 days.

Amending the articles so a shareholder can charge their shares as security for a loan

A London compliance advisory business whose articles, like most, did not allow its shares to be used as security for a creditor

By Malcolm Zoppi20 October 2026Professional services

Key facts

Deal type: Corporate restructuring
Acting for: The company
Business: Compliance advisory business, London
Sector: Professional services
Deal value: Not applicable
Structure: Special resolution adopting amended articles permitting the shares to be charged and transferred on enforcement
Timescale: A short exercise, agreed with the creditor's solicitors
Completed: February 2026
Lead solicitor: Malcolm Zoppi

At a glance

A shareholder in a London compliance advisory business agreed to offer their shares as security to a creditor. The company's articles of association, like those of most private companies, were not written with that in mind: their transfer restrictions would have stood in the creditor's way if it ever needed to enforce. We amended the articles so that the shares could be charged and, if necessary, transferred on enforcement, and agreed the wording with the creditor's solicitors. The amendment was adopted in February 2026.

The client and the objective

The creditor would only accept the shares as security if it could be confident of taking them, or selling them, if the debt was not paid. The company and the shareholder wanted to give that confidence without opening the door to unrelated transfers or weakening the protections the articles gave everyone else.

The steps

Review of the existing articles to identify every provision that could block a charge or a transfer on enforcement.
Drafting amendments that permit the shares to be charged and allow a transfer to the creditor or its buyer on enforcement, without triggering pre-emption rights or the directors' power to refuse registration.
Agreeing the amended wording with the creditor's solicitors.
A special resolution of the shareholders adopting the amended articles, filed at Companies House.

Key legal points

Why standard articles get in the way

Most private company articles give the directors discretion to refuse to register a transfer, and many give existing shareholders a right of first refusal over any shares being sold. Those are sensible protections for a small company, but a creditor holding a share charge needs to know that, if it enforces, the transfer will be registered and no one can block it. Without an amendment, the security is worth much less.

A narrow carve-out

The amendment was drafted to apply only to the charge and its enforcement. Every other transfer remains subject to the usual restrictions, so the other shareholders keep their protections and the company keeps control over who becomes a member in normal circumstances.

Agreeing it with the creditor

Because the amendment existed to satisfy the creditor, we agreed the wording with its solicitors before the resolution was passed. That avoided a second round of amendments once the creditor's advisers had reviewed the articles.

Outcome

The amended articles were adopted and filed in February 2026, and the shareholder was able to provide the security the creditor required.

What this deal shows

If shares are to be offered as security, check the articles first; they usually need amending.
A well-drafted carve-out satisfies the lender without weakening the protections the articles give everyone else.
Agreeing the wording with the lender's solicitors up front saves a second round.

“The creditor was willing to lend against the shares, but only if the articles would let it enforce. A narrow amendment gave it that certainty without changing anything else.”
Malcolm Zoppi

Related deals

Moving shares into an overseas holding company: a cross-border group reconstruction with stamp duty relief

A London consultancy restructured so that its shares were held by a holding company in Slovakia, with stamp duty relief claimed on the reorganisation

Corporate restructuringProfessional services

Shares for promotion that did not happen: buying back influencer shares as bad leavers

A London supplements brand that gave shares to social media influencers in return for promotion, and took them back at nominal value when the promotion never came

Corporate restructuringRetail and e-commerce

Buying out a business partner: share transfer and separation in a digital marketing agency

Two co-owners going their separate ways amicably, with the shares, the clients, the staff and the intellectual property divided on paper

Corporate restructuringMarketing and media

Frequently asked questions

: Yes, by granting a share charge to the lender. But most private company articles restrict transfers and let the directors refuse to register them, which undermines the lender's ability to enforce. Lenders will usually require the articles to be amended before they accept the shares as security.
: Typically that the directors must register a transfer to the lender, its nominee or a buyer on enforcement, and that pre-emption rights and other transfer restrictions do not apply to those transfers. The changes should be limited to the charge so that ordinary transfers remain restricted.
: By a special resolution of the shareholders, passed by at least 75 per cent of the votes, at a general meeting or by written resolution. The resolution and the amended articles must be filed at Companies House within 15 days.

Free initial consultation

Get the specialist support you need

Buying, selling or running a UK company? Book a free initial consultation and I will tell you what the work involves, what it is likely to cost and how long it should take.