Concerning the holders: Overview, definition, and example
What does "concerning the holders" mean?
"Concerning the holders" is a phrase commonly used in legal or contractual documents to refer to matters, rights, or obligations that specifically apply to the holders of certain assets or instruments, such as shares, bonds, or other securities. This term is typically used to address issues that affect the individuals or entities who hold legal ownership of a particular instrument or asset. In the context of securities or investment contracts, "holders" refers to those who possess the securities, and "concerning the holders" highlights actions, rights, or terms that apply directly to these individuals.
For example, a clause "concerning the holders of common stock" would address the rights, duties, or obligations that apply to individuals or entities who own common stock in a company.
Why is "concerning the holders" important?
"Concerning the holders" is important because it helps define and clarify the rights and responsibilities of the parties involved, especially when dealing with ownership of financial instruments, such as stocks, bonds, or other equity. This phrase ensures that specific provisions within the contract, agreement, or legal document are directed toward and affect the holders of these assets. By explicitly defining what is meant by "concerning the holders," a business or organization can outline the terms of engagement, rights, and duties of investors or stakeholders clearly.
For businesses, understanding what is meant by "concerning the holders" helps to ensure that the rights and responsibilities of shareholders, bondholders, or other holders are communicated accurately in agreements or during corporate governance activities.
Understanding "concerning the holders" through an example
Imagine a company, Tech Innovations, has issued bonds to investors. The bond agreement contains a clause that addresses how the company will communicate with and treat the holders of the bonds. The clause might state: "Concerning the holders of bonds, the issuer agrees to provide semi-annual interest payments and notify the holders of any material changes to the company’s financial condition." This clearly outlines the obligations that the company has toward the bondholders.
In another example, a company's stockholder agreement may include a provision "concerning the holders of common stock," which specifies the voting rights of shareholders, the distribution of dividends, and the procedures in the event of a merger or acquisition. The provision directly addresses the rights of those who hold shares in the company.
An example of a "concerning the holders" clause
Here’s how a clause like this might appear in a contract:
“Concerning the holders of the company’s preferred stock, the Company agrees to provide quarterly dividend payments, and any material changes to the dividend policy will be communicated to the holders at least 30 days in advance.”
Conclusion
The phrase "concerning the holders" is crucial in legal and financial documents as it clarifies the rights, obligations, and provisions specifically affecting the owners or holders of certain assets, such as stocks, bonds, or securities. It ensures that the terms of engagement with holders are well-defined and ensures transparency in how their interests are handled. For businesses and investors, understanding this term helps ensure that the appropriate rights and responsibilities are clearly communicated and upheld.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.