Brief Introduction About Continuing Disclosure Agreement
This agreement or undertaking is issued by the municipal securities or by an obligated person for the dissemination of securities and its financial information, which includes some operational information and disclosure required for the events that take place in the marketplace.
What Is a Continuing Disclosure Agreement?
A continuing disclosure agreement issued by a government official or an obligated person containing the details of the bonds offered, including bond calls, sale of the property to secure repayment of bonds, rating changes, etc.
Who Takes a Continuing Disclosure Agreement?
This agreement is made between municipal authorities and the public regarding the disclosure of certain information for the investment of securities.
What Is the Purpose of a Continuing Disclosure Agreement?
The basic purpose of this agreement to maintain transparency and clarity regarding the financial status of security and it also helps to protect the financial interest of the investors.
Contents of a Continuing Disclosure Agreement
The contents of an agreement are provided below:
- Purpose and objective of this Disclosure Agreement
- The duration and date of commencement of the agreement
- Details of the definitions of the terms, including annual filling, beneficial owner, disclosure representation, obligated person, filling date, etc.
- The financial information which needs to be disclosed
- The financial statement which must be filled and details whereof
- The details of the accounting principles applicable pursuant to which financial statements
- Other relevant information including the details of dissemination agent, remedy for breach, beneficiaries, and record-keeping
How to Draft a Continuing Disclosure Agreement?
The process of drafting of the agreement has been annexed below;
- Mention the purpose of this Disclosure Agreement
- Mention the details of the definitions of the terms, including annual filling, beneficial owner, disclosure representation, obligated person, filling date, etc.
- Mention the details of provision of annual filing and content of annual filings
- Mention the details of the reporting of Specified Events
- Termination of Reporting Obligation
- Mention other relevant information including the details of dissemination agent, remedy for breach, beneficiaries, and record-keeping
The negotiation process of this kind of agreement is not possible as the terms and conditions of the agreement are decided by the government, and if the investor finds the terms and conditions suitable, they can proceed with the agreement.
Benefits of a Continuing Disclosure Agreement
One of the basic advantages of this agreement is that it provides the details regarding dissemination of securities and its financial information which includes some operational information and disclosure required for the events that are being taken place in the marketplace
What Happens in Case of Violation?
In case of violation of the Continuing Disclosure agreement on the part of both the parties involved, they can sue each other of breach of contract and also claim for compensation considering the terms and conditions of the agreement. In case the agreement provides the remedies for breach of agreement, then the parties can settle the dispute accordingly.
The need for legal documentation is an essential part of any business dealing. It is very crucial to know the financial and other details regarding security prior to making an investment. In this way, this agreement acts as a means to provide detailed and accurate information regarding an event.
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Sample Continuing Disclosure Agreements
