Bonds are one of the most common types of corporate securities that firms will use to raise capital for major projects or expansions. However, business leaders may not be familiar with what to expect when their firm issues bonds for the first time.

Will Any Company Be Able To Issue Corporate Bonds?

While corporate bonds are among the most common types of securities, it should be noted that not every business will be able to issue these bonds. As with other types of capital, it will be necessary for companies to meet creditworthiness requirements, to have a positive financial outlook, and for there to be a demand for bonds from the firm. While this can lead to individuals assuming that only large corporations are able to issue these bonds, it is common for medium-sized businesses to also utilize this as an option to raise funds.

Why Is It Necessary To Hire A Securities Attorney For This Process?

For most businesses that are issuing bonds, this will be done through a brokerage or a major bank. However, it is still advisable for you to retain a securities lawyer to help guide your business through this process. There are many legal documents that will have to be created, signed, and filed throughout this process. To ensure that you are fully aware of the terms contained in these documents, a securities lawyer will be able to review any of these documents so that they can verify that they reflect the terms that you are expecting for the bond.

What Happens If Your Firm Defaults On These Securities?

While issuing bonds can be an excellent way for your firm to raise capital, it is vital for you to have an aggressive plan in place to avoid the risk of defaulting on these securities. If your firm were to default on its bonds, there are a number of repercussions that it could face. One of the most obvious will be the company's credit rating suffering a significant hit. However, it can also be possible for the firm to face a lawsuit from its bondholders, which could prove very costly for the firm. When you are in the process of considering issuing bonds, it will be important to discuss the potential legal liabilities that your firm can face with a securities lawyer. By better understanding these risks, your firm will be able to implement policies and strategies to mitigate these risks.

For more information, reach out to a resource like Carter & West Law.