The first step in setting up a banking infrastructure involves creating a specialized Special Purpose Vehicle (SPV) C Corporation. This acts as the official corporation that handles all operational activities, audits, bookkeeping and more. It is a legal entity created to insulate the issuer of an asset-backed security (such as one based on a pool of mortgages) from the originator (such as the mortgagee) of the asset collateralizing the security.
A SPV is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives. SPVs are typically used by companies to isolate the firm from financial risk. A formal definition is “The Special Purpose Vehicle is a fenced organization having limited predefined purposes and a legal personality”.
Normally a company will transfer assets to the SPV for management or use the SPV to finance a large project thereby achieving a narrow set of goals without putting the entire firm at risk. SPVs are also commonly used in complex financings to separate different layers of equity infusion. In addition, they are commonly used to own a single asset and associated permits and contract rights (such as an apartment building or a power plant), to allow for easier transfer of that asset. They are an integral part of public/private partnerships common throughout Europe which rely on a project finance type structure.
A special purpose vehicle is a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt. An off-balance-sheet SPVdocuments its assets, liabilities, and equity on its own balance sheet rather than on the parent company’s balance sheet as equity or debt. The parent company typically prefers this arrangement due to improved management of assets and liabilities, lower risks, higher credit ratings, lower funding costs, greater financial flexibility and lower capital requirements.
To properly set up a SPV, we need to perform an internal and external audit by our team of accountants and lawyers to ensure that your company is in a good financial standing. By analyzing all relevant financial information, we can provide proof to regulators that your money has been properly taxed and is accounted for. We need confirmation that your company is not involved in any money laundering, drug/weapons/human/sex trafficking so that your personal assets are not at risk if a project does not go according to plan. Our goal is to ensure that no other individual or corporation can pierce the corporate veil and seize your personal assets.