Legal mortgage of mr tan share holdings

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Reference no: EM133168839

Mr Tan is the major shareholder and holds 78% of Logistics Sdn Bhd, a private limited company with wide business interests. Mr Tan decided to expand his business to Indonesia as the market is huge. He sought financing from WXY Bank and basing on Logistics Sdn Bhd's strong financials, WXY Bank approved a term loan of RM2 million to the Company against legal mortgage of Mr Tan's share holdings of 78% in the Company's equity capital.

(a) Explain briefly the weakness of accepting Mr Tan's shares in Logistics Sdn Bhd.as collateral for the loan.

(b) If you are the security documentation Officer attending to this case, explain the precautions you would take to ensure this legal mortgage is perfected?

Reference no: EM133168839

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