BOND RESOLUTION Meaning and
Definition
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A bond resolution refers to a formal document that outlines the terms and conditions of a particular bond issuance. It is typically prepared by a governmental organization or a corporate entity to provide clarity and legal authority for the issuance of bonds. The resolution serves as an essential framework for various stakeholders involved in the bond issuance process, including the issuing entity, bondholders, underwriters, and the governing body responsible for approving the bonds.
In the bond resolution, key information is provided, such as the purpose of the bond issuance, the amount and type of bonds being issued, the interest rates, maturity dates, and any additional features or covenants associated with the bonds. The resolution also specifies the source of repayment for the bonds, which can include revenue from dedicated projects, taxes, or other forms of income generating activities.
Furthermore, the bond resolution often includes provisions regarding the rights and obligations of both the issuing entity and the bondholders. These provisions may address areas such as the use of bond proceeds, maintenance of collateral or reserves, requirements for periodic reporting and audits, and the process for default and remedies.
The bond resolution is a legally binding document that must be approved by the governing body of the issuing entity, such as a city council or board of directors. It provides a transparent and comprehensive framework for all parties involved in the bond issuance, ensuring compliance with legal and financial requirements, and serving as a reference point throughout the life of the bonds.
Etymology of BOND RESOLUTION
The word "bond resolution" consists of two components: "bond" and "resolution".
1. Etymology of "bond":
The term "bond" traces its origins to the Old English word "bonda" and the Old Norse word "bonde". Both of these words referred to a "peasant farmer" or a "freeman" who lived on the land they owned. Over time, the meaning of "bond" evolved to include a legal agreement or contract to ensure compliance or payment. In the context of finance, a bond refers to a fixed-income security that signifies a loan agreement between an issuer (such as a government or corporation) and an investor.
2. Etymology of "resolution":
"Resolution" stems from the Latin word "resolutio", which means "loosening" or "dissolving". In its original sense, "resolution" referred to the process of resolving or settling a disagreement or conflict.
