Special Purpose Vehicles | Set cruise control and forget?

Credit Suisse released an excellent research paper at Davos this year entitled “How Corporate Governance Matters”. Coming at the end of a flurry of corporate governance scandals that were operatic in colour and scale (Volkswagen, FIFA, Toshiba…), this is indeed a topic which seems ripe for discussion. Messrs Keating, Koutsoukis and colleagues make interesting observations which are clearly of relevance to all who dabble in the equity markets.

 

This article, however, looks at how the concept of good corporate governance applies to corporations that are off Main Street and geographically remote from (but very connected to) Wall Street and the major international financial centres; we are referring to special purpose vehicles (“SPVs”) established to participate in securitisation transactions, typically in jurisdictions like the Cayman Islands where the authors practise. The thinking on SPVs and governance has, over the course of the last few years, subtly evolved. Some market participants and users, however, may not have noticed this.

 

This article was originally published by Law360 in September 2016.

 

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