Closed-end indentures include collateral as well as provisions that ensure the collateral may only be assigned to one specific offering. In this case, what the Board of Pacific Ocean is asking for is the indenture of the bond issue. The contract in which both parties agree to certain conditions established for the bond. So, in order to continue with this transaction, the CEO of First Class should work with his legal team to write the indenture for the issue and then send it over to Pacific Ocean Trust, so they can review it and sign it.
Indentured servants enjoyed little personal freedom and some contracts allowed landowners to extend the work period for servants who were accused of behavior that was deemed improper. An independent contractor, often called a freelancer, is someone who provides services to a company without being an official employee, allowing for more flexibility and control over their work. If you need more information about indentures or have specific questions, it’s best to consult with a legal professional who specializes in the type of indenture you’re interested in.
In the fixed-income market, an indenture is hardly ever referred to when times are normal. But the indenture becomes the go-to document when certain events take place, such as if the issuer is in danger of violating a bond covenant. The indenture is then scrutinized closely to make sure there is no ambiguity in calculating the financial ratios that determine whether the issuer is abiding by the covenants.
Other Common Credit Indenture Terms
Others treated slaves more humanely than their indentured servants because slaves were regarded as a lifetime investment and servants would leave within a few years. However, informal debt bondage continued in the form of sharecropping and black codes. Though officially free, tenant farmers were unable to leave until they had repaid debts to the owners of the land where they worked. Since these debts tended to grow over time, the sharecropping system effectively replaced chattel slavery with an informal system of debt bondage. Indentured servitude is a form of labor in which an individual is under contract to work without a salary for a certain timeframe to repay a loan.
What Were Freedom Dues for Indentured Servants?
- In modern-day finance, the word indenture most commonly appears in bond agreements, real estate deals, and some aspects of bankruptcies.
- Today, indentured servitude is illegal in the U.S. and banned in nearly all countries.
- Although it does not specifically refer to indentured servitude, the Supreme Court has interpreted the amendment to include compulsory labor in repayment of debt.
- Servants were often uneducated and could be cheated so marking the two original copies helped to ensure a lasting means of authenticating the contract.
Should a conflict arise between the issuer and bondholder, the indenture is the reference document utilized for conflict resolution. When the offering memorandum is prepared in advance of marketing a bond, the indenture will typically be summarised in the “description of notes” section. A trust indenture is similar to a bond indenture, except it also details the trustee’s responsibilities in overseeing all of a bond issue’s terms.
A modern form of indentured servitude still exists in the form of debt bondage, also known as bonded labor, where people work for low or no wages in repayment of a debt. This may be for a debt that the worker agreed to work off as a condition for receiving a loan or advance, or a debt that was inherited. Indentured servitude historically referred to agreements between apprentices and master tradesmen, with the apprentice working for free to learn a trade. It evolved as a way for an individual to pay the cost of transportation to the American colonies. independent variable definition and examples Workers were commonly bought and sold when they arrived at their destinations.
Some common types of indentures include mortgage indentures, bond indentures, and lease indentures. These types of indentures are used in real estate transactions, corporate finance, and rental agreements, respectively. An indenture is a legal contract between two parties, particularly for indentured labour or a term of apprenticeship but also for certain land transactions. When the agreement was made before a court of law a tripartite indenture was made, with the third piece kept at the court. The term is used for any kind of deed executed by more than one party, in contrast to a deed poll which is made by one individual.
Some masters considered their indentured servants as personal property and made these individuals work difficult jobs before their contracts expired. Immigrants often entered indentured servitude contracts of their own free will, as opposed to slaves, who did not. Constitution prohibited most forms of involuntary labor, except as punishment for a crime. Although it does not specifically refer to indentured servitude, the Supreme Court has interpreted the amendment to include compulsory labor in repayment of debt.
Kids Definition
It specifies the important features of a bond, such as its maturity date, the timing of interest payments, method of interest calculation, callability, and convertible features, if applicable. A bond indenture also contains all the terms and conditions applicable to the bond issue. Other critical information included in the indenture are the financial covenants that govern the issuer and the formulas for calculating whether penalties for amending taxes and owing the issuer is within the covenants (usually ratios based on corporate financials).
The agreement entered into by the issuer, and the trustee is referred to as the trust indenture. A trust indenture is an agreement in a bond contract made between a bond issuer and a trustee that represents the bondholder’s interests by highlighting the rules and responsibilities that each party must adhere to. Indentures typically involve two or more parties, such as a borrower and a lender, a property owner and a tenant, or a company and its investors. The parties involved in an indenture are legally bound by the terms and conditions outlined in the document. The main purpose of an indenture is to clearly define the rights, responsibilities, and obligations of each party involved in a legal agreement. It helps to ensure that all parties understand and agree to the terms of the contract.
If such conditions violate labor laws or other rights, this may be considered a form of human trafficking. Indentured servants did have limited rights including access to the courts and entitlement to own land. However, masters retained their right to prohibit their servants from marrying and had the authority to sell them to another master at any time.
This practice was common during the 17th and 18th centuries, where over half of immigrants worked off an average of three years’ servitude. Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Indentured servants often served as field workers, gardeners, cooks, and laborers. Virginia and Maryland operated under the “headright system” where incentives, such as 50 acres of land, were provided for planters to import workers. This system was used by wealthy plantation aristocrats to increase their land holdings.
A copy of it must be filed with the Securities and Exchange Commission (SEC) for corporate bonds with aggregate principal issues of at least $5 million. Corporate issues for less than $5 million, municipal bonds, and bonds issued by the government are not required to file trust indentures with the SEC. Of course, these exempted entities may choose to create a trust indenture to reassure prospective bond buyers, if not to adhere to any federal law. In the U.S., there can be several types of indentures, all typically involved with debt agreements, real estate, or bankruptcy. Historically, indenture has also referred to a contract binding one person to work for another for a set period of time (indentured servant), particularly European immigrants.
They can provide more detailed guidance and advice based on your unique situation. Indentured servitude in the U.S. began in the early 1600s in Virginia, not long after the settlement of Jamestown. Many early American settlers sought cheap labor to help manage their large estates and farms, and commonly agreed to fund the passage of European immigrants to Virginia in exchange for their labor. Shaun Conrad is a Certified Public Accountant and CPA exam expert with a passion for teaching. After almost a decade of experience in public accounting, he created MyAccountingCourse.com to help people learn accounting & finance, pass the CPA exam, and start their career. In the early history of the United States, many European immigrants served a period of indentured labour in order to pay the cost of their transportation.
The main difference between an indenture and a regular contract is the level of formality and legal complexity. Indentures are typically more formal, detailed, and legally binding than standard contracts. In a credit offering, a closed-end indenture clause may be used to detail any collateral involved that provides backing for the offering.
