The last amendment of the Act on Bonds introduced - among others - a security agent, i.e. a person who represents the creditors (the owners) of bonds in the process of establishing and executing a collateral.
The amendment is a reaction to the current practice of constituting a similar person in the issuance terms and conditions. However, up until now it was not clear whether constitution of this person was compliant with law. There are no special personal requirements regarding the security agent and the legislator explicitly states that the law is minimalistic and non-prescriptive. It is very likely that it will be banks who step in as the security agent in the first place. Nevertheless, the instrument can also be flexibly used in “private” emissions where the scope of creditors’ is narrow and no professional financial parties are involved.
The security agent may make the bonds more attractive and more widely used as the current uncertainty and legal complexity regarding use of collateral made them disadvantageous compared to standard loans.
Furthermore, if this regulation proves useful, it may be used as a precedent for similar future amendment of standard loan regulation. This would simplify some of the unnecessarily complex legal solutions currently used in loan documents and make the Czech and foreign financial documentation more compatible.