Special Purpose Vehicles
What is a Special Purpose Vehicle?
A Special Purpose Vehicle, commonly also known as an SPV, is typically a company set up for specific reasons and for a specific transaction. Often an SPV is part of a joint venture but other common uses are for property transactions. Sometimes Special Purpose Vehicles are also used where offshore ownership is part of the strategic transaction.
The principle of using a Special Purpose Vehicle is therefore quite straightforward. In practice, however, the underlying business situation and strategy are often highly complex, commonly involving commercial, legal and tax considerations and complex deal structures.
Our commercial and property law teams have the expertise and experience to advise you on complex deals and the use of Special Purpose Vehicles. Of course we can also deal with the paperwork to set up an SPV together with any associated joint venture agreement, contracts, Articles of Association and Shareholder Agreement. Please do get in contact.
Common uses for a Special Purpose Vehicle Company
The following are just a few examples of situations where a company may be set up solely for a single transaction or purpose.
- Buying a Buy to let property
- For a joint venture
- Where for strategic reasons IP needs to be protected from other assets in a business
- Transactions with international business partners
- Property development transactions involving a developer and a builder
- Moving assets into a limited company with family shareholders for IHT planning purposes
With property related SPV’s there are obvious advantages but also potential pitfalls and problems. Buying property via a newly set up limited company where mortgage finance is required will be inherently problematic and personal guarantees will almost certainly be required.
Overseas Special Purpose Entities
In some situations, Special Purpose Entity companies are registered in offshore jurisdictions. Aside from the adverse implications often drawn, rightly or wrongly about the use of offshore jurisdictions, there are inherent complications and risks with offshore entities, although there can also be major benefits, including privacy and tax. Where an offshore Special Purpose Entity is being considered, it is essential to have trusted, tried and tested and experienced local advisers in the relevant jurisdiction.
We have built up a network of lawyers and other advisors in many countries in the world, including offshore jurisdictions. Having worked with those advisors on many transactions, we are an ideal and reliable choice for international transactions and an alternative to the much larger and more expensive City law firms.
Solicitors for a Special Purpose Vehicle
Whether you are considering setting up a property SPV or any other form of separate entity for a business transaction, spin off, joint venture or to reduce a business risk, we can help. Please do get in contact.