Consequences and Obligations

Read this page carefully before applying for a bond. Accepting a TGS bond is a significant financial and legal commitment. The obligations described below are not waivable and are enforceable at law.

1. Full Reimbursement Obligation

If TGS pays a demand on your bond, you are personally and corporately liable to repay TGS the full amount paid, plus all costs, fees, and expenses incurred by TGS in assessing and paying the demand. This obligation is unconditional and survives the expiry or cancellation of the bond.

TGS will pursue recovery through all available legal means, including but not limited to civil proceedings, enforcement of the Director's Personal Indemnity, and realisation of any property-backed security provided.

2. Director's Personal Indemnity

All directors of the contracting entity are required to execute a personal indemnity in favour of TGS as a condition of bond issuance. This indemnity is joint and several — each director is liable for the full amount owed to TGS, not merely a proportional share.

The personal indemnity survives the winding up, dissolution, or insolvency of the contracting entity. Directors cannot discharge their personal liability by placing the company into administration or liquidation.

3. Property-Backed Security

Depending on the credit assessment outcome, TGS may require a registered mortgage or other security interest over real property as a condition of bond issuance. Where required, this security will be registered on the Personal Property Securities Register (PPSR) and/or the relevant land title register.

Failure to maintain the security (for example, selling secured property without TGS consent) constitutes a breach of your obligations under the bond agreement and may trigger immediate demand for full reimbursement.

4. Bond Call Risk

A bond call may be made by the Beneficiary if you fail to:

Complete the contracted works to the required standard
Rectify defects notified during the defects liability period
Comply with any other obligation specified in the bond instrument

TGS does not assess the merits of a Beneficiary's demand before paying — the bond instrument is typically an on-demand instrument. You will need to pursue any dispute with the Beneficiary separately and at your own cost, even after TGS has paid the demand.

5. Bond Fee is Not Refundable

The bond fee paid to TGS is non-refundable once the bond is issued. If the bond is cancelled early at your request, no partial refund of the bond fee will be provided unless expressly agreed in writing by TGS at the time of cancellation.

6. Disclosure Obligations

You are required to disclose any material change to your financial position, credit profile, or the status of the underlying construction contract during the term of the bond. Failure to disclose material information is a breach of the bond agreement and may result in immediate termination of the bond and demand for full reimbursement.

Seek independent legal and financial advice before accepting a TGS bond. TGS does not provide financial advice. Your broker can provide information about the bond product, but is not acting as your legal or financial adviser.