LEGAL ASPECTS OF SECURITISATION

Views:
 
Category: Entertainment
     
 

Presentation Description

No description available.

Comments

Presentation Transcript

LEGAL ASPECTS OF SECURITISATION : 

LEGAL ASPECTS OF SECURITISATION

Securitisation : 

Securitisation Securitisation is the net present value of a defined package of future cash flows Securitisation as a product benefits the originator as well as the investors and the financial system

Securitisation - Definition : 

Securitisation - Definition carefully structured process pool of loans and receivables (with or without appropriate credit support) packaged, underwritten and sold to investors in the form of tradeable securities

Securitisation – Definition (Contd.) : 

Securitisation – Definition (Contd.) Securitisation means – acquisition of FAs by any securitisation company or reconstruction company by raising up funds from QIBs by issue of security receipts representing undivided interest in such FAs or otherwise Section 2(z) – SRES Act, 2002

Financial Asset : 

Financial Asset FA means debts or receivables and includes a claim to any debt or receivable or part thereof whether secured or unsecured any debt or receivable secured by mortgage of or charge on, immovable property any right or interest in the security, whether full or part underlying such debt or receivables any beneficial interest in property whether movable or immovable, or in such debt or receivable, whether such interest is existing, future, accruing, conditional or contingent any financial assistance

Securitisation StructureManner of transfer of loans / receivables & issuance of security receipts : 

Securitisation StructureManner of transfer of loans / receivables & issuance of security receipts Securitisation Deed Originator (transfers, assigns or transmits the loans or receivables) SPV SC RC Trust Obligors Investors QIBs General Public Issuance of Security Receipt

Securitisation StructureRouting of monies collected from obligors : 

Securitisation StructureRouting of monies collected from obligors Collection & Paying / Servicing Agreement Servicer (Originator) SPV SC RC Trust Obligors Investors QIBs General Public Issuance of Security Receipt

Securitisation StructureTransaction Participants & Documentation Structure : 

Securitisation StructureTransaction Participants & Documentation Structure Originator Securitisation Deed Special Purpose Vehicle SC RC Trust Servicer Underlying agreements, if any, relating to loans / receivables Servicing Agreement Offer Document or Information Memorandum Investors QIBs General Public Obligors Security Receipts

Typical Securitisation Structure : 

Typical Securitisation Structure Obligors Investors Originator Ancillary Service Provider Structurer & Arranger Rating Agency SPV (Assignee& Issuer) Issue of SRs Servicing of SRs Credit Enhancement, Liquidity Support, Forex & Interest Rate Hedging Transaction Legal Counsel Registrar & Transfer Agent Investors’ Representative

Securitisation – Legal Issues : 

Securitisation – Legal Issues SPVs True sale / transfer of financial assets Stamping Registration Security receipts Taxation

SPVs : 

SPVs Issues relating to : Form of SPV (company, trust, etc.) Establishment of SPV Flexibility to choose appropriate legal structure Regulatory Framework

True sale / transfer of financial assets : 

True sale / transfer of financial assets Separation of loans and underlying securities Assignability of facility documents and security documents Part assignability of debt or receivables Execution of proper instrument of sale / transfer Notification to borrower Bankruptcy remoteness from the originator Securitisation documents

Securitisation Documents : 

Securitisation Documents Mandate Letter Supplementary Mandate Letter Confidentiality Agreement Rating Agreement Information Memorandum Declaration of Trust (SPV – Trust Route) Securitisation Agreement Securitisation Deed

Securitisation Documents : 

Securitisation Documents Collection and Paying Agent Agreement or Servicing Agreement Power of Attorney Security Receipts or PTCs Comfort Letters Legal Opinions

Securitisation Deed : 

Securitisation Deed Nodal Document Captures all the elements of the securitisation transaction as contemplated Originator representations and warranties Nature and extent of vesting of security interest Right to collect and recover all amounts due and payable in respect of the FA from the originator

Stamping : 

Stamping Dichotomy of stamp laws (Indian Stamp Act, 1899 and State stamp enactments) Stamping of: - SPV constitutional documents - Securitisation documents (especially instrument of sales / assignment and security receipts) Need for rationalisation of stamp duty structure

Registration : 

Registration Indian Registration Act, 1908 Declaration of Trust (if relates to immovable property) Securitisation Deed Instrument of transfer (sales / assignment) Companies Act, 1956 Filing of modification of charges Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 Securitisation of FAs Reconstruction of FAs Creation of Security Interest Other Statutes Merchant Shipping Act, 1958, Motor Vehicles Act, 1988 Patents Act, 1970 Designs Act, 2000

Tax Issues : 

Tax Issues Issues that affect the obligor Deduction of tax at source Issues affecting: Originator SPV Servicer Investors Necessity to achieve tax neutrality

Slide 19: 

THANK YOU

authorStream Live Help