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BONDS;

What is a Bond?

A bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity date.

What are the different types of Bonds Offer?

Goldstar insurance Company offers varies forms of Bonds ranging from:

  • Advance Payment Bonds
  • Bid Bonds
  • Customs Bonds
  • Performance Bonds
  • Retention Bonds


ADVANCE PAYMENT BOND/GUARANTEE;

Guarantee supplied by a party receiving an advance payment to the party advancing the payment. It provides that the advanced sum will be returned if the agreement under which the advance was made cannot be fulfilled. Also called advance payment guarantee.

BID BOND

A bid bond is issued as part of a supply bidding process by the contractor to the project owner, to in hopes guarantee that the winning bidder will undertake the contract under the terms at which they bid.

CUSTOMS BONDS

Customs surety bond is a contract used for guaranteeing that a specific obligation will be fulfilled between customs and an importer for any given import transaction. The main purpose of a customs bond is to guarantee the payment of import duties and taxes.
A customs bond is required on all commercial imports entering the Uganda. Merchandise will not clear customs without a properly executed bond.

PERFORMANCE BOND

A performance bond, also known as a contract bond, is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. A job requiring a payment and performance bond will usually require a bid bond, to bid the job.

RETENTION BOND

A retention bond is an agreement between a contractor, its client, and a third party known as a surety provider, which acts as a guarantor between the two parties.

The bond agreement states that in return for the client not holding cash retention, the surety provider will undertake to pay the client up to the amount that they would have had by way of cash retention should the contractor fail to carry out the works or remedy defects.

A retention bond is a win-win: the client has the monetary protection it requires and the contractor keeps hold of its cash.

Why use a Retention Bond?

Offering a retention bond in place of cash retention can result in substantial cost savings for the contractor. The money that would have been held in cash retention remains in the cash flow of the contractor improving its financial position.

In addition, the retention bond will normally contain a fixed expiry date so there is no confusion about when the contractor has been released from his obligations.

There is also no chasing for the release of cash retention at the end of the works.

What are the requirements for Bond Issuance?

At Goldstar Insurance Company the following must be availed by the Party seeking for a Bond before Issuance:

  • Company Profile
  • Copy of trading license
  • Articles and memorandum of Association
  • Certificate of incorporation
  • Security cheque: 100% of bond amount (Signed but un dated)
  • Copy of contract document
  • Signed counter guarantee upon receiving a copy from us
  • Latest bank statement
  • Upfront Payment

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