Identifying bondholders and effective communication
Produced in partnership with Katerina Papamichael of D F King (Europe) Limited
Identifying bondholders and effective communication

The following Restructuring & Insolvency practice note Produced in partnership with Katerina Papamichael of D F King (Europe) Limited provides comprehensive and up to date legal information covering:

  • Identifying bondholders and effective communication
  • Why keep in touch with bondholders?
  • Forms of bonds and how they are deposited
  • Clearing systems
  • Bond holding and ownership chain
  • Bondholder identification
  • The agent’s role

Companies, governments and municipalities issue bonds to finance their operations and fund projects. The bond market offers a very efficient way to borrow capital. Although many companies are legally entitled to borrow from a bank, the process is often costly and time consuming. Issuing bonds is generally viewed as easier, less restrictive and a cheaper way than borrowing money directly from a bank. For more information, see Practice Notes: Introduction to the debt capital markets and Bonds and notes.

For information on the key documentation and parties to an issue of debt securities, see Practice Notes: Issuing debt securities—key documentation and Parties in an issue of debt securities.

Why keep in touch with bondholders?

In the past, not a lot of interest was shown by issuers in communicating with their bondholders unless there was an absolute need, and even then the communication simply consisted of a notice sent through the trustee and would eventually not necessarily reach all the beneficial owners.

The trustee is a financial institution with trust powers, such as a commercial bank or trust company that is given fiduciary powers by a bond issuer to enforce the terms of a bond indenture. Bond indenture is a document that constitutes a contract between a bond issuer and a bondholder and includes the terms and conditions of the bond.

The trustee monitors the bond issuer’s compliance with agreed-upon

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