Notarial Bonds: Securing debt in times of uncertainty

Should directors neglect their duties by continuing to operate without proper consideration for a weakening financial position, they could be held liable for the losses as a result.

Schindlers Attorneys explains more in this story

Notarial Bonds: Securing debt in times of uncertainty

A creditor is often faced with the decision of what form of security for the due and proper performance by the debtor of its obligations under, for example, a loan agreement, would be most beneficial to the creditor.

Common forms of security include suretyships, guarantees, pledges, mortgage bonds (if the debtor owns immovable property) and notarial bonds (“Bond/s”) (if the mortgagor owns movable property).

Bonds are a lesser known form of security and under-utilised in commercial practice. Bonds may be used in conjunction with other forms of security, depending on the transaction.