What is Clawback?

ClawBacks is usually understood as a financial mechanism that allows the collection of income previously issued to investors and other parties, as a means of covering the costs associated with a particular enterprise or investment enterprise. In a sense, this means that Clawback includes an extension of the benefits that follows the search for these benefits to make the project forward.

There are several examples of how Clawback works. One is known as a dividend clawback. This is related to how the project is structured and what duties of the sponsor and investors assume the project. If the sponsors have agreed to return the previously earned benefits of the project if the company lacks enough money to cover expenditure, Clawback is possible. This would mean that dividends can be issued for one quarter, when there is sufficient cash flow to cover all obligations, but the same dividends will be Recaled in the next quarter, when cash flow is not enough.

The second example is Clawback General. This approach is a common element is a private partnership. Partnership can be created for a specific project, such as a group of investors who want to play together in the stock market. General partners are equal in the company and therefore bear the same responsibility. If the advantage is realized from the activity in various stock markets, they share all the profit equally. At the same time, when there is a loss, all partners will return some of their previously gained benefits to cover the loss.

with a limited partner Clawback is slightly different. Partnership may include some participants who are listed as general partners, while others are listed as limited partners. General partners contribute more to the company, so EARN can greater shares of any generated income. Limited partners will receive benefits on the basis of the amount of contributions that have committed themselves to the project. WhenHe is called CLAWBACK, general partners will return most of his received advantages, while a limited partner returns a smaller amount.