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Select all that applyWhat are some covenant types that can prevent the transfer of corporate assets to shareholders?Multiple select question.Restrictions on the sale of assetsWorking capital restrictionsDividend restrictionsLeasing restrictions

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Select all that applyWhat are some covenant types that can prevent the transfer of corporate assets to shareholders?Multiple select question.Restrictions on the sale of assetsWorking capital restrictionsDividend restrictionsLeasing restrictions

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Solution

The types of covenants that can prevent the transfer of corporate assets to shareholders include:

  1. Restrictions on the sale of assets: This type of covenant can limit a company's ability to sell its assets, which in turn can prevent the transfer of assets to shareholders.

  2. Working capital restrictions: These covenants can require a company to maintain a certain level of working capital, which can prevent the company from transferring assets to shareholders.

  3. Dividend restrictions: These covenants can limit a company's ability to pay dividends to shareholders, which can indirectly prevent the transfer of assets to shareholders.

  4. Leasing restrictions: These covenants can limit a company's ability to lease its assets, which can also prevent the transfer of assets to shareholders.

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