Portfolio Interest Clause Samples
The Portfolio Interest clause defines a specific type of interest income paid by U.S. borrowers to certain foreign lenders that is exempt from U.S. withholding tax. This clause typically applies to interest payments made on debt instruments, such as bonds or loans, held by non-U.S. persons who meet specific requirements, such as not being related to the borrower and providing appropriate documentation. Its core practical function is to encourage foreign investment in U.S. debt securities by removing the tax barrier, thereby making such investments more attractive to international lenders.
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Portfolio Interest. Nothing in this clause 13 in any way restricts a Seller from holding up to a 5% interest in any entity provided such holding is only a passive portfolio holding for investment purposes (where the Seller does not exercise an active role in the operational direction or management of the relevant company), even if that company carries on a business that competes with the Business.
Portfolio Interest. Notwithstanding anything in this Series 2 Note to the contrary, in the event that, the holder is not a United States person (as defined by Section 7701(a)(30) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”)) and on the date of any conversion of this Series 2 Note into Conversion Shares pursuant to Section 3.1, the interest payable under this Series 2 Note does not qualify as “portfolio interest” (“Portfolio Interest”) as defined in Section 871(h) of the Code, or the exemption from withholding for Portfolio Interest set forth in Section 871(h) of the Code is no longer in effect, then so much of the accrued interest as is equal to the amount that the Company is required to withhold under Section 1441(a) of the Code shall not be converted into Conversion Shares pursuant to Section 3.1, and the Company shall withhold such amount in compliance with Section 1441(a) of the Code.
Portfolio Interest. It is the intention of the parties to this Agreement that the Notes will be considered instruments eligible for the portfolio interest exemption under sections 871(h) or 881(c) of the Code.
Portfolio Interest. The parties hereto acknowledge, understand and agree that any interest being paid under this Agreement (including amounts being treated as original issue discount for U.S. tax purposes) is exempt from U.S. withholding tax pursuant to the portfolio interest exemption as set forth in Code Sections 871(h) and 881(c), provided that the applicable Initial Purchaser satisfies the requirements described in Section 7.5(c).