Registration Of Share Pledge Affected Group Structure

The Enviroco case will be of interest to banks' in-house lawyers, credit policy teams and credit documenters dealing with security issues. The case looked at the holding company/subsidiary relationship and the impact on that relationship of the holding company granting security over shares in the subsidiary. Specifically, the case considered whether a particular company was a "subsidiary" that fell within the scope of an indemnity. In considering that, it held that the transfer of legal title to the company's shares by way of security to a bank (which became the registered holder of the shares in the company's share register) caused the company to lose its status as a Companies Act subsidiary.