The following statement is not a feature of negative pledge lending:
A)The borrower undertakes not to pledge existing or future assets of the company or group to anyone else without the approval of the lender.
B)The company may be restricted from increasing its borrowing and total external liabilities beyond a specified proportion of total tangible assets,including overseas assets.
C)The loan agreement may contain a covenant that restricts the payment of dividends to a specified percentage of each period's profit.
D)None of the given options.

Question

Quizplus · Accepted Answer

Negative pledge lending involves a borrower agreeing not to pledge any assets to other lenders without the original lender's consent, but it does not inherently restrict dividend payments as described in option C. That type of restriction is more characteristic of financial covenants in loan agreements rather than a feature specific to negative pledge clauses.

The Following Statement Is Not a Feature of Negative Pledge