Protective covenants

Provisions in a bond indenture, or ^charter provisions affecting a preferred stock, (1) which bind the company not to do certain things considered injurious to the issue or, (2) which set forth remedies in the event of unfavorable developments. Example of (1): agreement not to place a lien on the property ahead of the bond issue. Example of (2): the passing of voting power to the preferred stock if dividends are not paid.