Legal Due Diligence · glossary
Any right a third party holds over an asset, such as a charge, an option or a trust. Title diligence looks for encumbrances over the shares, and the SPA's title warranty says the shares are free from them. Chapter 6
Explained in Chapter 6, Corporate and Title, of Legal Due Diligence.
Also explained in M&A Foundations.
An encumbrance is any right a third party holds over the shares, such as a charge, an option or a trust. The one you will meet most is a share charge, which is security a lender takes over shares. A buyer who completes while a charge is in place has paid full price for shares a bank can take.Read Chapter 6, Corporate and Title →
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