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Chapter 3 — Affiliates Whose Securities Collateralize Securities Registered or Being Registered

3.1 Overview

3.1 Overview

In certain offerings under the Securities Act, the securities of an issuer may be collateralized (hereafter referred to as “collateralized securities”) with the securities of one or more of its affiliates.1 Generally, an issuer collateralizes its securities with those of its consolidated subsidiaries; however, in some circumstances an issuer may collateralize securities with those of an unconsolidated affiliate as well. References to affiliates in this chapter refer to both consolidated subsidiaries and unconsolidated affiliates. In addition, in practice, the issuer of a debt security would generally pledge the equity of its affiliate as collateral.

Footnotes

1
As defined in Regulation S-X, Rule 1-02(b), the term affiliate or affiliates means “an affiliate of, or a person affiliated with, a specific person is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.”