Consult with client to help determine optimal SPV or fund structure and setup.
• Form regular or series LLC or LP, as appropriate.
• Register entity in the applicable state.
• Obtain an EIN on behalf of the entity.
• File a foreign entity registration in all applicable states.
• Hire an effective registered agent for the entity.
• Provide useful template SPV of fund documents, including operating agreement/ limited partnership agreement, PPM and subscription agreement.
SPV Fund Financing
• As needed, review investment documents and suggest adjustments or side letters.
• Set up a bank account to aggregate commitments, as needed.
• Record the receipt of documentation and wire transfers from investors.
• Maintain files for each investor, create and maintain a ledger of investor information.
• Track investor ownership percentages and expense allocations.
• As needed, assist with multiple closings.
SPV Fund Investing
• Assist in closing transactions by obtaining and aggregating executed documents and transmitting capital to company or sponsor.
• Make appropriate book entries reflecting the use the proceeds from the sale of SPV or fund interests to investors.
• Account for the wiring of funds to the portfolio companies or sponsors.
• As needed, assist with follow-up (pro rata) investments.
What is a Special Purpose Vehicle?
A special purpose vehicle (SPV) is a subsidiary of a company which is protected from the parent company's financial risk. It is a legal entity created for a limited business acquisition or transaction, or it can be used as a funding structure. It is sometimes called a special purpose entity (SPE).
An SPV has assets, liabilities, and a legal status outside of the obligations of the parent company. The primary purpose of an SPV is to carry out a specific business activity outside of the parent company, therein protecting the parent company from risks such as bankruptcy and insolvency issues.
Why is a Special Purpose Vehicle Important?
SPVs are formed as limited partnerships, trusts, corporations, or limited liability companies. They adopt the legal protections of the particular business entity. An SPV is created for independent ownership, management, and funding of a company.
An SPV, for example, can be created to produce a lease that is expensed on the company's income statement rather than recorded as a liability on the balance sheet. An SPV allows companies to secure assets, isolate assets, create and invest in joint ventures, isolate corporate assets, and perform any other specific financial transactions.
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