What Is SEC Form T-1?
SEC Form T-1 is a statement of eligibility for a corporate trustee that must be filed with the U.S. Securities and Exchange Commission (SEC). The form describes the entity's eligibility to act as a trustee under an indenture—a written agreement—with an issuer of debt securities, like bonds. The trustee represents those who invest in these securities. By making the trustee "go on record" and offer info about itself, Form T-1 is a step towards safeguarding the security holders' rights.
- SEC Form T-1 is a statement of eligibility for a corporate trustee that must be filed with the U.S. Securities and Exchange Commission when new bonds or other debt securities are issued.
- This trustee, usually a bank or trust company, has entered into a written agreement with the debt issuer to represent the investors who buy the bonds or debt securities.
- Form T-1 contains basic operational and personnel information about the proposed trustee, as well as its relationships with the issuer of debt and the underwriters.
- The issuer files Form T-1 as an exhibit to its overall registration statement when formally filing a public offering of debt securities with the SEC.
- By publicly registering and offering info about the trustee, Form T-1 is a step towards safeguarding the security holders' rights.
Understanding SEC Form T-1
To safeguard the rights of bondholders, issuers of debt instruments (such as bonds, notes, or debentures) are required by the Trust Indenture Act of 1939 (TIA) to retain a trustee. Governing the offering of notes, bonds, debentures, evidences of indebtedness, and certificates of interest, the TIA is a law that prohibits bond issues valued over $10 million (now updated to $50 million) from being offered for sale without a formal written agreement or indenture. Most corporate bond issues over $5 million are required to include a trust indenture.
While there are several types of indentures, one of the most common concerns debt-related investments. Specifically, it's a written agreement between the issuer of bonds, notes, or debentures and the trustee for these issues, who acts as a representative of the security holders. The indenture also specifies the terms and conditions of the debt securities, including the interest rate, maturity, any redemption terms, timing, and methods of payment, covenants, events of default, and any other specifically negotiated terms and conditions. It also outlines the duties of the issuer and the trustee.
Who Can File SEC Form T-1?
Form T-1 is filed by the issuer of the bonds (or whatever the debt securities are). It is similar to SEC Form T-2 and SEC Form T-3, except that it is used for corporate trustees instead of individual ones.
Financial institutions—usually a bank or trust company—are hired by issuers to serve as third-party trustees, for their bond issues. The entity serving as trustee acts on behalf of the bond or other security investors and complies with additional procedural safeguards.
SEC Form T-1 contains basic operational and personnel information about the proposed trustee, as well as its relationships with the issuer of debt and the underwriters, such as whether the issuer or any underwriter holds any of the trustee's securities and whether the trustee holds any securities of the issuer or any underwriter.
How to File SEC Form T-1
The issuer files Form T-1 as an exhibit to its overall registration statement when formally filing a public offering of debt securities with the SEC.
You can only satisfy an SEC filing obligation by submitting the information required electronically, using the SEC EDGAR Online Forms Management website.
Download SEC Form T-1 Here
You can get a sense of what Form T-1 looks like and requires by downloading it here. However, as noted above, the actual form must be filed electronically.