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Chapter 1 — Introduction

Chapter 1 — Introduction

Chapter 1 — Introduction

Debt or debt-like securities (see Section 2.2.3) that are issued by a registrant (specifically, a parent company that meets the conditions discussed in Section 2.2.1) and registered under the Securities Act of 1933 (the “Securities Act”) may be guaranteed by one or more consolidated subsidiaries. In other cases, debt or debt-like securities may be co-issued by a registrant and one or more of its consolidated subsidiaries. If the issuer fails to make a payment on the debt or debt-like securities, the co-issuers or guarantors may be obliged to make the payment. Under the Securities Act, guarantees of registered debt or debt-like securities are considered securities themselves. As a result, both the guaranteed debt or debt-like securities and the guarantees of those debt or debt-like securities must be registered with the SEC unless they are exempt from registration. Further, a registrant may pledge the securities of one or more affiliates (which, in practice, are primarily equity securities) as collateral for securities registered under the Securities Act (the “collateralized securities”). In the event of a default, the holder of the collateralized securities may enforce the collateral provisions and consequently become a holder of the affiliate’s securities.