Bonds & Securities

Surety Bonds

A surety bond is a contractual agreement among at least three parties:
The Obligee – entity that requires the bond. Obligees are typically government agencies working to regulate industries and reduce the likelihood of financial loss.

The Principal – the primary party who will perform the contractual obligation (or the job).

The surety – the insurance company that backs the bond. The surety provides a line of credit in case the principal fails to fulfil the task.

Bid Bonds

A written guaranty from a third party guarantor (usually an insurance company) submitted to a principal (client or customer) by a contractor (bidder) with a bid.

A bid bond ensures that on acceptance or winning of a bid by the customer or contractor they will proceed with the contract and will furnish the obligee with a performance bond. In the absence of this the guarantor will pay the customer the difference between the contractor’s bid and the next highest bid.

Performance Bond

A written guaranty from a third party guarantor (usually an insurance company) submitted to a principal (client or customer) by a contractor on winning the bid.

A performance bond ensures payment of a sum (not exceeding a stated maximum) of money in case the contractor fails in the full performance of the contract. Performance bonds usually cover 100 percent of the contract price and replace the bid bonds on award of the contract.

Advance Mobilization

This guarantee is given out to contractors only when the principal wishes to advance an amount of money to the contractor to mobilize resources to work on the project.
The bond is an undertaking to the owner of the project to refund monies advanced to the contractor to mobilize resources to work on the project should the contractor after collecting the mobilization fund default in the performance of the project.

If however the contractor utilizes the money in the performance of the project successfully then the bond becomes void

Supply Bond

Supply Bond ensures a supplier will produce the supplies or materials specified in a contract. If the supplier were to default, the bond protects the purchaser from any losses

In other words, supply bond guarantee performance of a contract by a supplier to furnish agreed upon supplies or materials. In event of a default by the supplier, the surety indemnifies the purchaser of the supplies against the resulting loss of time and value.

Customs Agents House

This bond is granted to Clearing Agents as a guarantee to Customs that should their misconduct result in loss of revenue to the state, the guarantor will pay Customs up to the value of the bond.

Exportation Bond

This guarantee is given to clients who want to export locally produced goods to other countries. The bond is a guarantee to CEPS up to the sales tax duty payable on the goods should the client fail to export the goods and it is discovered that the goods have been sold in the country and the duty is lost to the State. The bond becomes void when the goods are duly exported to their destination country.

Re-exportation Bond

This bond is granted to clients who bring in imported goods to use in the Country during their visits and to send them back. The bond is a guarantee up to the duty payable on the item should the visitor fail to send back the goods have been sold and the duty is lost to the State.

This bond is also issued to clients who want to re-export imported goods to another Country. The bond guarantees up to the duty payable on the goods should the client fail to re-export the goods and it is discovered that they were sold in the country.

Temporary Importation

Sometimes you may need to import goods into the country for a fixed period of time before re-exporting these goods to their final destination. Since all goods imported into the country need to be taxed, importers use this bond to guarantee that they’ll pay their taxes even if these goods are not re-exported.

Transit Bonds

This is a guarantee given to transporters of imported goods destined for a neighbouring country where the transporter hasn’t paid their custom duties. It covers them if the goods do not reach the stated destination, which can lead to loss of revenue for the state.

Warehousing/Security Bonds

This bond is granted to importers whose goods are kept at a licensed bonded warehouse(s), pending payment of their import duties. If the importer defaults or fails to pay customs duties and taxes eligible on these goods at the bonded warehouse, the guarantor will pay Customs these lost duties.

Removal Bonds

These are guarantees to Customs that should the goods being removed from a given warehouse(s) not reach their destination, and this leads to a loss of duty to the State, the guarantor will pay this amount to Customs.