Shivam AgarwalShivam Agarwal asked 2 years ago
1 Answers
RaviRavi Staff answered 2 years ago

covenants means terms and conditions given in any agreement / contract
restrictive means they restrict parties from doing any activities
for example
in lending agreement they can specify borrower cannot take additional loan, he cannot use funds from different business, he cannot give charged assets for rent, he has to maintain current asset level etc
if these restrictive covenants are contravined, it can have financial impact, bank can call back loan, charged assets may be sold, borrower can be penalised 

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