SEBI regulated
Bond Trusteeship
Bond trusteeship is a legal arrangement where a trustee safeguards the interests of bond holders by holding security, monitoring compliance and enforcing rights on their behalf.
Role of Bond Trustee
- Acts on behalf of Bond holders to protect their interests.
- Holds the Bond Trust Deed and security documents in safe custody.
- Ensures compliance with the Companies Act, SEBI Regulations and listing norms.
- Monitors issuer performance, payment of interest, redemption and asset cover.
- Enforces security in the event of default and represents Bond holders’ rights.
Functions of a Bond Trustee
- Facilitates creation and registration of security within prescribed timelines.
- Monitors financial covenants, ratings and disclosure requirements.
- Assists the issuer with documentation, stock exchange approvals and compliance.
- Handles investor grievances and ensures timely redressal.
- Coordinates redemption and interest payments, and maintains transparency.
- Appoints a nominee director on the issuer’s board in the event of default.
Benefits
To Issuer Company / Bank
- Smooth coordination with SEBI, exchanges and investors.
- A professional trustee supports timely compliance and reduces regulatory risk.
- Documentation and security management for debt issuances.
To Bond Holders
- Safeguards investor interests through active monitoring.
- Provides transparent communication on ratings, defaults and payments.
- Enforces security and initiates recovery actions when required under the governing documents and applicable requirements.
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