Trust agreement with a bank (art. 338 LGS)
Article 338 of the General Companies Law requires the company issuing debentures to enter into a trust agreement with a bank, which manages the subscription and represents the debenture holders.
What article 338
Article 338 governs the debenture trust.
A company that decides to issue debentures must enter into a trust with a bank whereby the bank assumes: 1) the management of the subscriptions; 2) the control of the payments and their deposit; 3) the necessary representation of the future debenture holders; 4) the joint defense of their rights and interests during the term of the loan.
Source: Law 19.550, art. 338 — InfoLEG (updated official text)
Commentary
The trustee (a bank) is the central element: it organizes the placement and, above all, collectively represents and defends the debenture holders, who would otherwise be scattered vis-à-vis the company.
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