What describes shares held by a third party to be released upon certain conditions?

The concept of shares held by a third party to be released upon certain conditions is best described as escrow shares. In an escrow arrangement, shares are placed in the custody of a neutral third party—often a bank or lawyer—with specific instructions on when and how they can be released. This is typically used to ensure that terms of a deal are met before the shares are transferred to the intended party.

For instance, in a merger or acquisition, shares may be held in escrow to guarantee that the seller fulfills specific obligations, such as reaching a certain financial performance or completing regulatory approvals. Once those conditions are satisfied, the shares are released to the buyer.

Understanding the mechanism of escrow shares is crucial in corporate transactions, as it secures the interests of both parties by providing a level of trust and compliance with contractual obligations. This highlights why escrow shares are integral in managing risk in business arrangements.