We strongly support the development of legal thought and practice around the concept of bondholders’ representative (note/security trustee) that was introduced into Russian law in 2014.
To ensure smooth implementation of your DCM project, we recommend using Legal Capital Investor Services, an entity authorised by the Central Bank of Russia to act as bondholders’ representative.
Legal Capital Investor Services is an independent market participant set up to represent bondholders and protect their rights in relation to public debt instruments.
Embedding bondholders’ representative within your project structure allows to:
- develop efficient security structure and ensure effective out-of-court enforcement of pledges
- provide flexibility to contemplated bond issuances after the start of trading in secondary market, including by way of introducing amendments to issuance documentation without the need for a resolution of a general meeting of bondholders
Main functions of a bondholders’ representative:
- effectively monitors the activities of the issuer or third parties affecting investors’ rights
- consents to introducing amendments to issuance documentation without the need to hold a general bondholders meeting therefore providing more flexibility to contemplated bond issuances
- acts as security trustee which allows to exercise control over security and enforce pledges in an out-of-court procedure, if the need arises
- in case of the issuer’s default – carries out procedural actions on behalf of bondholders without separately obtaining their authorisation