trust company or a commercial bank authorized by law and/or regulation
to act in a fidiciary capacity, as distinguished from an individual TRUSTEE.
the Trust Indenture Act of 1939 (P.L. 253, 76th Congress, August
3, 1939), issuers of obligational securities required to be registered
for public offering under the Securities Act of 1933 must qualify indentures
for such securities with the Securities and Exchange Commission.
The INDENTURE to be qualified shall require that there shall be
at all times one more trustees thereunder, at least one of whom shall
at all times be a corporation organized and doing business under the laws
of the United States or of any state or territory or the District of Columbia,
i.e., an "institutional" or corporate trustee, that is authorized
to exercise corporate trust powers and is subject to supervision or examination
by federal, state, territoria, or District of Columbia authority.
an institutional trustee shall have at all times a combined capital and
surplus of not less than $150,000.
No trustee shall have any "conflicting interest," i.e.,
interests in or connections with the issuer or the underwriters.
The trustee shall notify bondholders by annual report of such matters
as substitutions of collateral it permitted; advances to the issuer or
funds of the issuer in its possession; additional bonds authenticated;
etc. It shall notify bondholders
of any default within 90 days of its occurrence.
Upon the occurrence of defaults, the trustee is charged with the
"prudent man" rule in the exercise of its powers and duties
under the indenture. Lists
of bondholders shall be furnished to the trustee by the issuer, and the
former shall make such lists available to individual bondholders upon
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