Definition
An indenture is a legal contract between the issuer of bonds and the bondholders. This contract puts forward all the important features of a bond, for instance interest calculation method, maturity date, any specific feature such as convertibility and so on. An indenture also specifies the terms and conditions related to the issue of bonds.
Information in this contract
This legal contract would include information such as the instructions about whom to contact in case the bonds are called, the language that appears on the bond, the list of financial promises that the issuer has to abide by and so on. Also, whenever there arises a conflict between the bondholders and the issuer, the indenture becomes the point of reference for resolving the conflict. An indenture may differ from issuer to issuer but in most general terms this is a technical document as it specifies all the details related to the bond.
Not same as Prospectus
Sometimes, this is considered synonymous to a prospectus. But these two are not the same! An indenture is a legal contract that beholds the issuer and the bondholder, whereas a prospectus is only a summary of the terms and conditions related to the issue of bonds.
