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Indenture as supplied by EagleTraders.com (468 words) |
 | The indenture may contain provision that prior to default, the indenture trustee shall not be liable except for the performance of such duties as are specifically set out in the indenture. |
| The indenture may contain provision protecting the indenture trustee from liability for any error of judgment made in good faith by a responsible officer or officers of the trustee, unless it shall be proved that such trustee was negligent in ascertaining the pertinent facts. |
| For indentures to be qualified the act requires that they contain provisions requiring the indenture trustee to give to the indenture security holders notice of all defaults known to the trustee within 90 days after their occurrence. |
| Trust Indenture Act of 1939 (178 words) |
| A law passed in 1939 that prohibits bond issues valued at over $5 million from being offered for sale without a formal written agreement (an indenture), signed by both the bond issuer and the bondholder, that fully discloses the particulars of the bond issue. |
| The act also requires that a trustee be appointed for all bond issues, so that the rights of bondholders are not compromised. |
| The Trust Indenture Act of 1939 was passed for the protection of bond investors. |
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