The Trust Indenture Act of 1939

The Trust Indenture Act of 1939 (TIA) is a U.S. federal law that regulates the relationship between issuers of corporate debt securities and their bondholders. The primary purpose of the Trust Indenture Act is to protect the interests of bondholders by establishing certain standards and requirements for the content and administration of trust indentures.

Key components and provisions of the Trust Indenture Act include:

• Trust Indenture Requirements: The TIA requires that corporate debt securities issued in amounts exceeding $50 million be issued under a trust indenture. A trust indenture is a legal agreement between the issuer of the bonds and a trustee appointed to represent the interests of bondholders. The indenture outlines the terms and conditions of the bond issuance, including the rights and obligations of the issuer and bondholders.

• Disclosure Requirements: The TIA mandates certain disclosures in trust indentures to ensure that bondholders have access to relevant information about the bond issuance. These disclosures include details about the terms of the bonds, such as interest rates, maturity dates, and redemption provisions, as well as information about the issuer's financial condition and any material risks associated with the bonds.

• Duties and Responsibilities of Trustees: The TIA establishes the duties and responsibilities of trustees appointed to administer trust indentures on behalf of bondholders. Trustees are required to act in the best interests of bondholders and to enforce the terms of the trust indenture. They must also ensure that the issuer complies with its obligations under the indenture and take appropriate action to protect the rights of bondholders in the event of default or other adverse events.

• Prohibition of Certain Practices: The TIA prohibits certain practices that could be detrimental to bondholders, such as waiving or modifying certain provisions of the trust indenture without the consent of bondholders or engaging in self-dealing transactions that could create conflicts of interest.

• Enforcement and Remedies: The TIA provides bondholders with certain enforcement rights and remedies in the event of a default or breach of the trust indenture. Bondholders may take legal action to enforce their rights under the indenture or to seek redress for damages resulting from a breach of the indenture.

Overall, the Trust Indenture Act of 1939 is intended to promote transparency, fairness, and investor protection in the corporate bond market by establishing standards for trust indentures and ensuring that bondholders have access to essential information and legal protections.

See The Securities Act of 1933, The Exchange Act of 1934, The Trust Indenture Act of 1939, The Investment Advisers Act of 1940, The Investment Company Act of 1940, and Regulations S-K and S-X. See also Other Federal Securities Laws and Rules.