Bondholders Have the Right to Review the Company’s FinancesWhile widely known, it is essential to mention that bondholder rights include the ability to review the company’s finances due to their investment in it.
Governmental Agencies InvolvedFor companies that have sold their bonds in public offerings, bond-focused mutual funds and exchange-traded funds (ETFs), it is mandatory to file regular periodic reports with the U.S. Security and Exchange Commission (SEC). This information is publicly available and could be reviewed by the bondholders at any time.
Bondholders Hold First Rights to Asset DistributionAs bondholders have no ownership in the respective company, any decision that requires voting rights is only reserved to stockholders. But bondholder rights hold one major advantage over stockholders.
Bondholders Need to Manage Their Rights Carefully At the Time of Signing the IndentureThe overall mechanism of buying a bond at face value and profiting through it via interest rates or yields is common knowledge. It is something that is essential to every corporate bond. In fact, it makes up for the very nature of such a bond.
Why is this Relevant to Cryptocurrency Investors?As the cryptocurrency industry matures, more investment products will come to the market. As investors look at these products and make capital allocation decisions, it is important that they understand the traditional processes and ask the right questions to ensure capital preservation.
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