Comments On The Legal Issues Of Special Purpose Vehicle In Asset Securitization

Asset securitization originated from the United States housing mortgage backed securities in the 1970s. It has been introduced to China from the 1980s early. But the laws and regulations on asset securitization in our country are far more away from matching the demand of the securitization market. Legal effects of these laws and regulations are obvious inferior to the ones of contract law;trust law and securities law, etc. Although they provide with the evidence to securitization, on the other hand, there are still many obstacles in the process of asset securitization, therefore, the securitization law should be enacted or amended in order to solve various contradictions or issues during the asset securitization procedure.Special purpose vehicle (SPV) is a significant instrument and important safeguard in the operation of asset securitization. But in our existent law system, the establishment of SPV will meet many barriers. For instance, our laws don't admit limited joint enterprise, trust law has no detailed rules and regulations to put into effect;and company law provides rigidly, and so on. This article tries to find relevant ways to solve the issues of asset securitization.Through analyzing the form of SPV, we can know that there are the special purpose company and the special purpose trust in many countries in asset securitization in practice. The author thinks that the legal characters of SPV are an independent economic entity, a bankruptcy-remote one and a "special" company. To avoiding bankruptcy , we must design the reasonable ways of asset transferring. True sale and trust are the ways of asset transferring, which is an important phase in asset securitization. Company, joint enterprise or trust can be entitled as the form of SPV. On the base of our country's laws, the special purpose company and the special purpose trust are the most reasonable choices to our country. But we should conform to specified ideas and improve relevant laws to assure asset securitization successfully.