CovenantA formal agreement made in a deed.
Restrictive covenantsRestrictive covenants
Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends.
Deed of covenantDeed of covenant
A legal document which records the obligation of one individual to pay a specified sum to another for a specified number of years.The individual making the payment deducts tax at the basic rate and thus pays a net amount on which tax relief is obtained. If the recipient is a registered charity the payer can obtain tax relief up to his/her higher rate whilst the charity can claim back the amount deducted.In other words, it is a tax effective way for individuals to give to charity.
Provisions in a bond indenture or preferred stock agreement that require the bond or preferred stock issuer to take certain specified actions (affirmative covenants) or to refrain from taking certain specified actions (negative covenants).
Rate covenantRate covenant
A provision governing a municipal revenue project financed by a revenue bond issue, which establishes the rates to be charged users of the new facility.
Negative covenantNegative covenant
A bond covenant that limits or prohibits certain actions unless the bondholders agree.
Further SuggestionsDeed of covenant
CC and Rs (Covenants, Conditions and Restrictions)
Breach of covenant
Positive covenant (of a bond)