Special Purpose Vehicle

Knowledge Center





Description of Special Purpose Vehicle. Explanation.

 

Definition Special Purpose Vehicle. Description.


A Special Purpose Vehicle (SPV) is a company / legal entity with a limited purpose or focus. It is created by a corporation to conduct a specific or temporary activity. It is normally, but not necessarily, owned almost entirely by the sponsoring corporation. It must be distanced from the sponsor both in terms of management and ownership (not 100%), because if the SPV were to be owned or controlled by the sponsor, the SPV would be consolidated with the rest of the firms for regulatory, accounting, and bankruptcy purposes and there would be no difference between a subsidiary and an SPV.
 

Usages of Special Purpose Vehicles. Applications

Some common uses of such SPVs are (depending on the jurisdiction):

  • Conducting large and risky projects without putting the parent firm at risk.

  • Off-Balance Sheet Financing.

  • Operating in ways that are "barely legal".

  • A special Joint-Venture for sharing intellectual property.

  • Securitizing loan portfolios of banks.

  • Securitizing financial assets such as auto loans, credit card and hire purchase receivables, finance leases, aircraft operating leases, real estate mortgages.

  • Owning, transferring or financing a single asset with its associated permits and contract rights (such as an aircraft, a ship, a building or a factory).

  • Separating different layers of equity infusion in complex financings.

  • Protection from tax or legal consequences of the activities of the SPV (reinvoicing subsidiaries and offshore insurance companies).

Many SPVs are incorporated in countries such as the Cayman Islands, The Channel Islands, Luxembourg, etc.


Establishing a Special Purpose Vehicle. Process

The process of creating a special purpose vehicle is typically handled by lawyers and accountants who specialize in this type of activities. They provide specialist know-how to ensure that the entire process to set up the SPV is handled in a way which complies with the applicable laws.

Because an SPV is a legal entity, the exact laws, rules and/ or guidelines that are applicable will differ per jurisdiction.


Also called Special Purpose Entity or Special Purpose Corporation.


Special Interest Group - Special Purpose Vehicles


Special Interest Group (14 members)


Forum - Special Purpose Vehicles  

Discussions about Special Purpose Vehicles.


Hot Special Purpose Vehicle versus Structured Investment Vehicle and Structured Financial Operating Company
What is the difference between an SPV, an SIV (Structured Investment Vehicle) and a Structured Financial Operating Compa (...)
 
 
 
 
  Special Purpose Vehicle Regulations
What are the main rules and regulations for special purpose vehicles? Thanks... (...)
 
 
 
 
  Protect Legitimate Special Purpose Vehicles
SPVs have come on the spotlight of anti-money laundering legislation. There is a need to protect legitimate cross-border (...)
 
 
 
 
  Examples of a Special Purpose Vehicle
Can you give an example of a special purpose vehicle? Many thanks. (...)
 
 
 
 
  Special Purpose Vehicles in Risk Management
SPV's seem to be more active within the scope of risk management than anywhere else in the business. So can SPV's be con (...)
 
 
 
 
  Abuse of Special Purpose Vehicles
A vehicle that can cause much mayhem once control is lost by the steering party. In developing countries some government (...)
 
 
 
 
  Special Purpose Vehicles in Projects
Could someone please describe SPVs within a project management context? How do SPVs enhance project management work? (...)
 
 
 
 
  How to Set Up a Special Purpose Vehicle?
How to form a special purpose vehicle? What are the process steps? Thanks for any thoughts... (...)
 
 
 
 

Best Practices - Special Purpose Vehicles

Here you find the most valuable discussions from the past.



Expert Tips - Special Purpose Vehicles

Here you will find advices by experts.



Resources - Special Purpose Vehicles

Here you find powerpoint presentations, micro-learning videos and further information sources.



Compare with: Tax Haven  |  Joint-Venture  |  Start-up Company  |  Ring Fencing  |  Acquisition Integration Approaches  |  Strategic Alliance  |  Spin-Off  |  Divestiture

Special Interest Group Leader

You here? Sign up for free


 
 

Return to Management Hub: Change & Organization  |  Ethics & Responsibility  |  Finance & Investing  |  Knowledge & Intangibles  |  Strategy


More on Management  |  Return to Management Dictionary  | 

 

This ends our Special Purpose Vehicle summary and forum.



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2019 12manage - The Executive Fast Track. V15.2 - Last updated: 15-12-2019. All names of their owners.