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Section 110 was created in 1997 to help International Financial Services Centre (IFSC) legal and accounting firms compete for the administration of global securitisation deals, and by 2017 was the largest structured finance vehicle in EU securitisation. [1] [2] Section 110 SPVs have made the IFSC the third largest global Shadow Banking OFC. [3]
A special-purpose entity (SPE; or, in Europe and India, special-purpose vehicle/SPV; or, in some cases in each EU jurisdiction, FVC, financial vehicle corporation) is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives.
The scheme often makes use of off-balance sheet financing or special purpose vehicles with non-coterminous accounting periods. Assets and liabilities are transferred at fictitious valuations, in the hope that losses are deferred until the market recovers.
Orphan structure or Orphan SPV or orphaning are terms used in structured finance closely associated with creating SPVs ("Special Purpose Vehicles") for securitisation transactions where the notional equity of the SPV is deliberately handed over to an unconnected 3rd party who themselves have no control over the SPV; thus the SPV becomes an "orphan" whose equity is controlled by no one.
The special-purpose vehicle is responsible for "bundling" the underlying assets into a specified pool that will fit the risk preferences and other needs of investors who might want to buy the securities, for managing credit risk – often by transferring it to an insurance company after paying a premium – and for distributing payments from ...
This page was last edited on 18 November 2016, at 19:51 (UTC).; Text is available under the Creative Commons Attribution-ShareAlike 4.0 License; additional terms may apply.
VIEs gained notoriety in the early 2000's due to their role in the Enron scandal, where the company used special-purpose entities to hide mounting losses from investors. [ 1 ] [ 2 ] VIEs have also been employed by Chinese companies, such as Alibaba , to circumvent Chinese government regulations that restrict foreign ownership of certain assets ...
Under most financial accounting standards (Standard Accounting Statement (SAS) 3 and IAS 16), the value of fixed assets are recorded and reported at net book value. Also, carrying assets at net book value is the most meaningful way to capture asset values for the owners of the business and potential investors.