Special Purpose Vehicle
What is a Special Purpose Vehicle? Meaning.
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):
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.
This ends our Special Purpose Vehicle summary and forum.
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