SPV, also known as special purpose entity company, is usually established by professional institutions such as investment banks and law firms, with the purpose of isolating specific assets or business risks and protecting investors' interests. The establishment of SPV company usually needs legal, financial and tax approval and planning to ensure its legitimacy and effectiveness.
At the same time, SPV is also an independent legal entity, whose main function is to achieve specific goals or projects, which are usually used for asset securitization, financial leasing, mergers and acquisitions, etc. Companies are widely used in asset securitization, financial leasing, mergers and acquisitions and other transactions.
Characteristics of SPV company
First of all, SPV Company is an independent legal entity with independent legal person status and financial status, independent of its parent company and other related parties. Secondly, SPV company is established to achieve specific goals or projects, and is usually not directly related to the main business of the parent company. At the same time, independent assets and liabilities can effectively isolate specific assets or business risks and protect the interests of investors.
One of the characteristics of SPV company is flexibility. The structure and operation mode of the company can be flexibly adjusted according to specific objectives or projects to meet the needs of investors to the greatest extent. In asset securitization, SPV company can buy a specific group of assets, package them into asset-backed securities, and then raise funds from investors by issuing ABS securities.