The Law of August 5, 1992 which was implemented by the Royal Decree of November 29, 1993 (amended by the Royal Decree of April 7, 1995) introduced a Belgian legal framework for off-balance securitization of receivables.
The Belgian securitization system consists of a transfer by a company of its receivables to a vehicle which is especially incorporated with a view to securitization, a so-called Special Purpose Vehicle or "S.P.V.". This S.P.V. is financed by the issuance of securities.
The Belgian S.P.V. is called an "institution for investment in receivables" which can either take the form of a fund or a company. Each institution must be managed by a management company. A Belgian S.P.V. can issue both equity and debt instruments. At least some part of its securities must be offered to the public, thus excluding the possibility for a 100 % private placement (cfr. infra with respect to a bill of law on private placement). The securities issued by a Belgian S.P.V. must also be rated by a rating agency.
Other parties in the Belgian legal framework are the custodian who "keeps" the financial assets (cash, securities) of the S.P.V. and the supervising company which supervises the securitization transaction in the interest of the investors. Contrary to the supervising company, the custodian may be the company whose receivables are being securitized.
At present, the government has concrete plans to introduce a bill of law which provides for the possibility, amongst others, to establish a private institution for investment in receivables which is only financed by private investors. Hence, such private institution shall not be obliged to publicly offer its securities. Furthermore, this bill of law shall abolish the obligation to appoint a management company for a Belgian S.P.V. which is organized as a company. It is anticipated that these significant modifications of the Belgian legal framework will enter into force by the beginning of 1996.
The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.
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