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CS Professional · IFSCA - Regulations, Listing and Compliances · Listing and Issuance of Securities

Orion Logistics, an IFSC unit, plans to issue debt securities to investors. A director asks who safeguards bondholders' interests after the issue. Which arrangement is typical under the debt framework?

A trustee is typically appointed for the bondholders under a trust deed, where the framework requires it. The trustee monitors covenants and security and acts for holders, whereas the exchange does not guarantee repayment and auditors do not represent bondholders.

  1. AAppointment of a trustee to act for the debt holders where required by the framework and the trust deedCorrect
  2. BThe stock exchange acts as the sole guarantor of repayment
  3. CThe issuer's auditors manage bondholder claims
  4. DNo representative is ever appointed for debt holders

Explanation

Debt issues commonly involve a trustee acting for holders under a trust deed, monitoring covenants and security. Exchanges and auditors do not guarantee repayment or represent holders.

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