Distributions on Collateral Voting Clause Samples

The "Distributions on Collateral; Voting" clause defines how any payments, dividends, or other distributions received on pledged collateral are handled and how voting rights attached to such collateral are exercised during the term of a secured transaction. Typically, this clause specifies whether the borrower or the secured party is entitled to receive distributions and who has the authority to vote or make decisions regarding the collateral, such as shares in a company. Its core function is to clarify the rights and responsibilities of each party concerning the collateral, thereby preventing disputes and ensuring proper management of the collateral during the agreement.