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The terms for the issuance of royalties are negotiated between the royalty issuer
and the party negotiating for the purchase of the royalty. The royalty payment period
and a range of other factors can be negotiated. Also, royalties can be subject to
issuer initiated redemption, as well as royalty holder initiated repurchase or rescission
agreements. The issuer's obligation to make the agreed payments can be secured directly
or by third party endorsement. In most jurisdictions royalty payments made by the
issuer are tax deductible to the issuer. The tax treatment of the royalty payment
recipient varies by jurisdiction. The terms of the royalty should include terms
defining when and where royalty payments are to be made, as well as all relevant
restrictions on transfer, if any. The royalty issuer and purchaser should also agree
as to the amount and timing of information the issuer provides to the royalty owner.
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