Legal Issues Investigation On Securitization Special Purpose Vehicle

The special purpose vehicle(SPV) plays a core roles in the securitization operation progress. Two biggest functions of SPV are: First is it makes the securitizational capital isolate from the bankrupt risk of the capital's original holder. This protect the securities investors. Second, it avoids the "dual taxation" problem which occurs during the capital transferring. It plays the role as saving tax fee. In some sense, securitization depends on the structure and opetation of SPV. Therefore, the structure and opetation of SPV is the legislative keystone of securitization laws in worldwide. Based on the worldwide legislative experiences, securitization agency vehicle -SPV mainly has two ways, that is, SPV of corporation mode and SPV of entrust mode. These two modes have their own advantages and characters. Both of them have the functions on avoiding the bankrupt risk and saving the tax fee. In China, we have already do some practices on the securitization. However, we have not got any technical legislation about securitizaton and the current laws and regulations make some legal obstacles on the SPV structure. Thus, it's difficult for China to build up the true SPV. But please pay atttention to this, since 2005, the related bureaus had published series of regulations about securitization. It is helpful for China to build up the SPV and develop the securitization. Especailly it makes the legal obstacles for building up the SPV of entrust mode disappear. However, this regulations are in a lower lever of the legal hiberarchy. Also, the regulation on the standard of capital transferring and taxation problem and other things are not consummate yet. So, the writer thinks we should make the technial legislation on the SPV structure problem ,especailly taking sufficient consideration on avoiding the bankrupt risk and saving tax fee these two functions of SPV, based on taking the legislative experiences of US, Japan or our Taiwan region. We have already do some practices, and it's the most important things now is making the experiences which come from the practice to be law. Set the securitization, particular for the structure and permitting of SPV into the legal track. It really plays the roles on reusing the worse fluidness capital and imporving the finance development.