Once the security transfer is registered with the central securities depository, the creditor becomes the owner of the shares for as long as the debt remains outstanding. In our interpretation, it will exercise shareholder rights in relation to the company. The creditor may not transfer the shares onward or encumber them. Enforcement may begin only if the debt is not paid, and the creditor must give prior written notice. An agreement made before the debt falls due allowing the creditor to retain the shares permanently is invalid. However, voting, dividends and the procedure for transferring the shares back must be negotiated in the agreement.
A bank or investor may sometimes ask you to transfer your shares to it for as long as the debt remains outstanding instead of granting a pledge over them. For you as shareholders, the distinction is significant. With a pledge, you remain the owners, and only the owner of a security may pledge it (Section 51(2) of Act No. 566/2001 Z. z.). With a security transfer, the right is temporarily transferred to the creditor (Section 553(1) of the Civil Code), and the agreement is also governed by the Securities Act (Section 53(1)). A comparison of the instruments and the registration procedure is provided in security transfer of shares or a pledge (forthcoming) (in Slovak). Here, we focus on what the transfer means for you.
The creditor is the shareholder while the debt remains outstanding
A security transfer of shares takes effect only upon registration in the special register maintained by the central securities depository (Section 53(2) and (3), read together with Section 45(1) of the Securities Act). Under the CDCP Operating Rules effective from 1 September 2026, for book-entry shares the creditor and debtor then also submit an instruction to register the transfer, while for certificated registered shares the company amends the entry in the register of shareholders. For certificated registered shares, the person entered in the register of shareholders exercises the rights in relation to the company (Section 156(6) of the Commercial Code); for book-entry shares, the depository’s records replace that register (Section 156(8)). In our interpretation, the creditor will therefore vote and receive dividends. If you are the sole shareholder, the entry in the Commercial Register, which identifies the sole shareholder, will also change (Section 12, letter h), of Act No. 29/2026 Z. z.).
The law does not expressly specify whose instructions the creditor must follow when voting. However, the agreement must set out the parties’ rights and obligations concerning the transferred right for the duration of the security (Section 553a(2) of the Civil Code). In particular, negotiate whose voting instructions the creditor must follow, whether it will apply dividends towards the debt or pass them on to you, and which general meeting resolutions it may not support without your consent.
If the articles of association make transfers of registered shares subject to the company’s consent (Section 156(9)), the CDCP Operating Rules also require the issuer’s consent for a security transfer. Under those rules, shares that are already pledged cannot be transferred as security.
How the law protects you
The following quotation is reproduced in its original language:
Až do zániku zabezpečovacieho prevodu práva veriteľ nie je oprávnený prevedené právo previesť ďalej na inú osobu ani ho inak zaťažiť v prospech inej osoby. […]
If you do not pay the debt properly and on time, the creditor may sell the shares in the manner specified in the agreement or by auction (Section 553c(1)). It must give you and the debtor written notice of the commencement of enforcement at least 30 days in advance (Section 553c(3)). When selling outside an auction, it must exercise due care (Section 553c(4)). It must pay you any proceeds exceeding the claim together with its ancillary amounts and costs (Section 553c(5)). An agreement made before the debt falls due allowing the creditor to retain the shares permanently is invalid (Section 553c(2)), as explained in the real-estate context in the prohibition on automatic forfeiture of pledged assets. The agreement must also include a monetary valuation of the shares, the method of enforcement and the minimum bid for a voluntary auction (Section 553a(2)); these terms determine the price at which the shares will be sold in the event of default.
Repayment of the debt and bankruptcy
When the secured obligation is extinguished, the right reverts to you (Section 553d(1)). However, termination of the security transfer must be registered in the depository’s records, and CDCP requires the registration instruction to be accompanied by an original or an officially certified copy of a document proving that termination. The agreement should therefore specify who will submit the necessary instructions and by when, and require the creditor to issue you with confirmation after repayment.
If you are declared bankrupt, the security transfer is treated as ineffective in the bankruptcy proceedings, and a creditor that has duly registered its security in those proceedings has the status of a secured creditor holding a pledge (Section 50(3) of Act No. 7/2005 Z. z. on Bankruptcy and Restructuring). The Act does not expressly address the reverse situation, where the creditor registered as the owner of your shares becomes bankrupt. With a pledge, the shares remain yours, so this issue does not arise. This is another reason to consider whether the creditor would accept a pledge combined with a suspension of the right to dispose of the shares (Section 28(3), letter d), of the Securities Act).
We will review the creditor’s draft agreement with you and negotiate the arrangements for voting, dividends and the transfer of the shares back to you. We will amend the agreement as part of our security transfer of rights service. If the creditor agrees to a pledge, we will prepare and register it through our pledge over securities service.
This answer provides general information on the law as at 3 October 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
