Research On Legal Problems Of The Governance Of Special Purpose Company

Asset securitization, which is born in1970s, is flourishing worldwide because ofits unique advantages, and it is even referred to as the20th century’s greatest financialinnovation. Special purpose vehicle (SPV) is the quite center of the whole assetsecuritization process. SPV takes trust, company and partnership as its legal forms.Compared with other two forms, special purpose company (SPC) has been widelyadopted abroad for its significant advantages, both in law and in practice. As thecompany based on the special law, SPC has many characteristics that different fromtraditional company, so as the basic system construction. Among them, thegovernance system is not only the emphasis and difficulty but also the most uniquepart in the system construction of SPC. Around the particularity of the governance ofSPC, this paper researches the governance system of SPC from the perspective ofinternal and external governance mechanisms. And combined with the status quo ofChina’s legislation and practice of SPC, this paper builds the governance system ofSPC suitable for China.This paper is divided into four parts:The first part researches the basic theory of the governance of SPC. Firstly, itconducts a law analysis on the asset securitization, and points out that the legal natureof the asset securitization process is the process of transforming the credit of personinto the credit of assets, and achieving the target that the credit of assets can betransferred. Secondly, it researches the legal nature of SPV, and highlights theadvantages of SPC in the comparison of three legal forms of SPV. Then, based on theanalysis of the legal characteristic and function of SPC, it points out the uniqueness ofSPC. Lastly, it conducts an analysis on the governance of SPC, and believes that theconstruction of the governance system of SPC is firmly around two specialpurposes---to protect the rights and interests of the investors and to securitize the basicassets, and based on the credit of assets.The second part researches the internal governance mechanism of SPC. Aroundthe two special purposes, the internal governance mechanism of SPC involves notonly the corporate structure of the traditional corporate governance theory, but alsothe business rules of SPC. The corporate structure involves the shareholders and theboard of shareholders, the directors and the board of directors, the supervisors and the board of supervisors, and the independent directors. The business rules involves thelimitation of the business scope, the plan of the asset securitization, the managementof the securitized asset, the delivery and transformation of securities, the borrow anduse of the capital, and so on.The third part researches the external governance mechanism of SPC. Theexternal governance mechanism of SPC involves three parts---the crisis isolationmechanism, the protection mechanism on the rights and interests of investors and theexternal supervising mechanism. The crisis isolation mechanism is the foundation ofthe operation of SPC and the key of the formation of the credit of assets. It can alsoprotect the rights and interests of the investors indirectly and involves many systems.The protection mechanism on the rights and interests of investors is the mechanismprotects the rights and interests of the investors directly. It involves the meetingsystem of asset-backed securities (ABS) holders, the priority system of ABS holders,the supervising system, the information disclosure system and the appropriatemanagement system of the investors. The external supervising mechanism means thesupervision of the subjects except investors on SPC.The fourth part researches the construction of the governance system of SPC inChina. Firstly, it analyses the status quo of China’s legislation and practice about SPCand the governance system of SPC. Then, it researches the legal obstacles on thegovernance of SPC existing in China’s current legal system, and makes somesuggestions. Lastly, based on the analysis of the second part and third part, combinedwith the status quo of China’s legislation and practice, it makes some specificsuggestions on the construction of the governance system of SPC in China thatestablish a specific law on asset securitization and set a special chapter on SPC andthe governance system of SPC.