MALAYSIA Law and Practice Contributed by: Dilys Tan, Adnan Sundra & Low
• It must have independent and professional directors or trustees, as the case may be. • It must be bankruptcy-remote. For more infor - mation on this, please refer to 6.4 Construc- tion of Bankruptcy-Remote Transactions . • It must be dissolved in the following circum - stances: (a) when the SPE refuses to accept transfers of the assets or to issue ABS within 90 business days from the date on which the securitisation transaction has been lodged with the SC or such other period as may be specified by the SC; (b) when more than 75% of the holders of the ABS have resolved, in accordance with the terms and conditions of the securitisation transaction, that the SPE be dissolved, and the SC has been notified of this resolution – if there are classes of ABS, more than 50% of the senior classes of the holders of ABS must have agreed to the dissolution of the SPE; or (c) upon the full repayment of the ABS in accordance with the terms and conditions of the securitisation transaction. Please also refer to 1.2 Structures Relating to Financial Assets and 2.1 Issuers . 6.3 Transfer of Financial Assets Asset Transfer and “True Sale” Criteria The transfer of the assets from the originator to the SPE must be a “true sale”, in that the risk of the transfer of assets from the originator to the SPE being recharacterised as a financing trans - action instead of a “true sale” should be mini - mised as far as possible. To that end, the true sale criteria set out in paragraphs 2.09 to 2.14 of Part 4, Section B of the LOLA Guidelines must be complied with. Such criteria include that:
• the underlying asset must have been isolated from the originator to the extent that it is put beyond the reach of the originator and its creditors, even in a receivership or bankrupt - cy, as far as possible; • all rights and obligations of the originator in the underlying asset must be effectively transferred to the SPE; • the originator must not hold any equity stake, whether directly or indirectly, in the SPE, and the originator must not be in a position to exercise effective control over the decisions of the SPE in relation to the securitisation transaction; • the SPE must have no recourse to the origi - nator for any losses arising from the assets save for any credit enhancement provided by the originator at the outset of the securitisa - tion transaction; and • if the originator is also the servicer, the ser - vices provided by the servicer must be on an arm’s length basis and on market terms and conditions – also, there must be no obliga - tion imposed on the originator to remit funds to the SPE, unless and until such funds have been received by the originator from the debtor of the underlying assets. Typically, a true sale opinion is also obtained from the transaction solicitors to confirm that the true sale criteria above have been fulfilled. In Malaysia, the following are ways in which an effective transfer of the assets from the origina - tor to the SPE can occur. By way of registration of transfer This is the most-preferred method, as it is clear that ownership of the asset has changed from the originator to the SPE. However, this typically applies to real estate assets only.
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