Chastity bond,

Definition of Chastity bond:

1. Corporate bond that becomes redeemable at its face value when its issuer becomes a takeover target.

2. A chastity bond is one of a number of measures intended to prevent the hostile takeover of a company. This type of bond matures immediately upon the completion of a trigger event such as a takeover or a change in control of the issuer. The term likely comes from the fact that its objective is to prevent unwarranted attention from unwelcome corporate suitors.

3. Chastity bonds are corporate bonds intended to dissuade hostile takeovers, based on the premise that if a large issue of these bonds mature and become payable upon completion of a takeover, the overall purchase price may become prohibitively expensive to the acquirer. .