Special Purpose Entities (SPEs)/Special Purpose Vehicles (SPVs)

by Norris Law Group on November 21, 2014

Special Purpose Entities (SPEs)/Special Purpose Vehicles (SPVs)In a previous blog, we discussed shell companies and how they can be an extremely efficient and powerful vehicle for businesses of all sizes as well as corporations. Other than shell companies, businesses also have another option: a special purpose entity (SPE), also known as a special purpose vehicle (SPV).

According to Investopedia, special purpose entities and shell companies are very similar. But they also have key differences. Like shell corporations, special purpose entities are legal and must be filed with the U.S. Securities and Exchanges Commission. SPEs can be used much like shell corporations to portray a given company in a favorable light. But, unlike shell corporations, SPEs are often used to reduce financial risks for companies by allocating assets to the special purpose entities rather than to the parent company. This allows public companies to protect themselves from risk and liability in business ventures.

Like shell companies, SPEs are also recognized worldwide. Eurostat, an organization that supplies statistical data for the European Union, states that companies may wish to set up SPEs for a whole host of reasons:

  • “to protect a company from financial risk, often in the context of a large project;
  • to separate different layers of equity infusion in complex financing operations;
  • to own and more easily dispose of assets and associated permits and rights; or
  • to engage in a public-private partnership relying on a project-finance structure.”

Is a special purpose entity or special purpose vehicle the right choice for your business? A conversation with skilled business law attorney may help you decide.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County, UT and throughout Utah, Wyoming and Idaho. Contact them today at 801-932-1238 or online for a free consultation.

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