Legal Research On Special Vehicle Company In Asset Securitization

As a kind of financing technique,asset securitization is a complex and structured financial derivatives.The originator cuts assets which will generate stable cash flue into standard pieces through SPV,securitizes the asset and sells them to the investor. SPV is a key element in asset securitization,for all the steps of asset securitization will not be accomplished without SPV. Asset securitization developed much faster in China after Administration of Pilot Projects for Securitization of Credit Assets Procedures was implemented.There are three modes of SPVs all over the world such as SPT,SPC and LLP.Asset securitization in China is in the early stages, the pattern of SPV is limited to SPT,and there is no law to confirm the existence of SPC.With the blossom of asset securitization, SPC will be an inevitable choice in China.The legal nature of SPC shall be identified as a company governed by special law.Bankruptcy remote is significant feature of SPC, which is defined by the important role SPC played in asset securitization.To establish the system of bankruptcy remote of SPC,independence between basic asset and bankruptcy of SPC itself,the originator and SPC,shall be fixed by laws,and the relevent regulations should also strictly limit the bankruptcy which the SPCs voluntarily apply for.To establish a SPC in China,approval must be made by the authorities,and the legal form of SPC can be limited liability company or a joint stock limited company incorporated.Legal construction of SPC should be consisted with capital system,initiator system and the organizational structure that can meet the special requirements of SPC.The articles of association and the asset securitization plan are the most important files of SPC,the content of these files should be specified in relevant laws and be authorized before execution.The operation of SPC should be including but not limited to asset transfer,securities issue and daily management.Asset transfer shall be identified as a true sale which should be in accordance with conditions required by laws an relevant accounting disposal.Assett-backed securities can be in form of preferred stock,ordinary bond and pay-through securities.Daily asset management and cash management of SPC should be appointed to special agency for its simplicity of organization.The principle of protecting investors interest should be emphasized in asset securitization.Systems of meeting of asset-backed securities holders, administrative regulation and compulsory information disclosure of SPC should be established to protect the interests of investors.