What Is a Debenture Trustee?

A bond trustee is a party that represents the interests of a bondholder in a bond legal relationship. Because bond issuance is geared to society, bondholders are numerous and scattered, and it is difficult to effectively monitor whether bond issuers fulfill their obligations. When a bond has a security interest, the security cannot be divided and shared by the bond holders, making it more difficult to protect the interests of the holders. In this case, in order to facilitate bondholders' common protection of their legitimate rights and interests, a trustee is often appointed to exercise creditor's rights and security rights on behalf of all bondholders, and to preserve the security on their behalf. In addition, the law often grants trustees of corporate bonds the authority to take all necessary measures to ensure that bondholders can get the principal repayment. Bond trustees are usually one or several financial institutions, and the trust and investment company or the bank trust department will take on this role. Bond trustees are generally designated by the bond issuer. The two sign a trust contract stipulating the establishment of a trust and the transfer of property ownership. The contract must specify the rights and obligations of the trustee, and in particular, the circumstances under which the trustee should Hold a meeting of bondholders to take appropriate actions to protect the interests of bondholders. ^[1]