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Study On The Legal Issues Of Asset-based Securitization

Posted on:2008-07-03Degree:DoctorType:Dissertation
Country:ChinaCandidate:Z P ZhangFull Text:PDF
GTID:1116360215963080Subject:International law
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Based on the reference to legislation in other countries and practiceat home and abroad, this dissertation is intended to explore the legalissues at different stages of securitization, which consists of sixchapters.Some basic concepts and theories are discussedin chapterⅠ. Despitethe heated debate on the definition of the term "securitization", thisdissertation holds that it' s unnecessary and impossible to defineaccurately such an ever-developing phenomenon with rich contents, andit' s wise to achieve that by specifying the scope of related laws andregulations. Securitization willattribute great significance to Chinesefinancial market, especially to facitate the disposal of huge amount ofnon-performing loans. Anyway, securitization is still on its trial stage,there are much room for improvement in the related legal system. Thedevelopment path and the present legal environment are discussed at theend of this part.Titled the legal issues in asset transfer, chapterⅡinvolves thelegal nature of the fundamental asset, the anti-assignment clause, andthe method of asset transfer. The basic prinples in prohibiting orlimiting the transferability lies in two factors including the safeguardof public policy and the intrests of detors or any third parties. Creditorsand detors have conflicting reliance on the anti-assignment clause. The validity of such a clause varies in different legal systems. The methodof transfer includes trust, renovation, participation and assignment. Andthe legal issues in each method are discussed in this part. When comingto the Chinese legislation in this field, this dissertation points outthe existant deficiencies and suggestes some improvements.ChapterⅢis about the legal issues in the bankruptcy remoteness.Such factors are mentioned as proof to decide the existance of true salewhich is crucial to bankruptcy remoteness as following: the recourse tothe transferor enjoyed by the transferee, the transferor' s continuousmanagement of the asset after transfer, the buyback arrangement, thereserve clause in the agreement, etc. During the recent years somescholars have begun to criticize the true sale criteria and proposed anew one named functional analysis. Having discussed the nature andprinciples of the new criteria, the author concluded that the problemsin the true sale criteria still exist in the new one. Moreover, some pointsare even more ambiguous than the old one. Dispite the fact that the truesale criteria has some flaws under certain circumstances, it willcontinues to serve as the determinant for bankruptcy remoteness.Consolidation is another major issue here by which the assets andliabilities of the originator and SPY are mingled when the origintor goesinto bankruptcy, which will arouse disasterous consequences to thesecuritization transaction. Two lines should be followed to decide theapplication of consolidation. One is the existence of identical intrests,and the other is the necessity for the prevention of some harms or therealization of some benefits. In the case of China, it' s suggested thatthe judges have the discretion to decide true sale with reference to theChinese accounting standard.The chapterⅣdeals with the legal issues in the process ofestablishing and operation of SPY. The most common forms of SPV are SPTand SPC. The choice of SPV and SPT is decided by the different tax treatment, the legal requirments for the establishing and operation, and thefacilitation for the securitization transaction. The bankruptcyremoteness of SPV itself is one of the most important legal issues forthis stage. The legal methods to achieve the bankruptcy remoteness includethe waiver of bankruptcy, independent director, business restriction, etc.All these methods will be explained in this part. Chinese law is far frombeing perfect in this respect, and is strongly recomanded that spcial SPVlaw be enacted to regulate the establishment of the entity, the issuranceof the asset-backed securities, and some other requirments for both SPCand SPT.The supervision of the risks in securtization is crucial to thehealthy development of the industry and the financial market as a whole.The various risks in the transaction include market risks, credit risks,liquidity risks, legal risks, operational risks, etc. The concept ofbalance between safety and competition, efficiency and cost, and theprinciples of legitimate supervision, moderate supervision, and efficientsupervision should be followed in the course of risks supervision.The last part deals exclusively with the special legal issues ininternational transaction, inculding the ascertaining of applicable law,the role of international agreement, and the management of withholdingtax. Also some other points are mentioned without elaboration on them,such as the enforcement, transfering price, etc.
Keywords/Search Tags:securitizaiton, anti-assignment, bankruptcy-remoteness, special purpose vehicle, information disclosure
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