NETHERLANDS Law and Practice Contributed by: Mandeep Lotay and Dámaris Engelschman, Freshfields LLP
investment funds. Investors are usually heavily involved in the legal structuring of the transac - tion as well as undertaking their own due dili - gence with respect to the assets to be securi - tised; this reflects their position as beneficiaries of the expected cash flows generated by the securitised assets. 2.7 Bond/Note Trustees The use of note trustees is not very common in the Dutch securitisation market. Please see 2.8 Security Trustees/Agents . 2.8 Security Trustees/Agents Note trustees generally manage and represent the interests of the investor in the contractual relation to the issuer SPV. Security trustees hold and manage the security interests of all the pre - scribed secured parties in the transaction. It is currently uncertain under Dutch law whether it is possible for a third party, such as a secu - rity trustee, to hold a security interest without it being owed the corresponding financial obli - gation which that security interest secures. In the case of a securitisation, a security trustee would not be a creditor of any of the notes, but would still be a holder of the entire security pack - age. Therefore, it is market practice for Dutch securitisation transactions to create a “parallel debt” structure. Under a parallel debt structure, an independent claim for the security trustee against the issuer SPV is created to mirror the claims of the secured parties against the issuer SPV. Payment by the issuer SPV to the secured parties reduces the security trustee’s claim against the issuer SPV by the corresponding amount. The role of the security trustee is usually per - formed by independent third-party trust cor - porations or specialised entities affiliated with
credit institutions. It is also common to incor - porate a new SPV for a specific transaction to perform the role of security trustee, usually in the form of a Dutch foundation ( stichting ) with limited objects and purposes. 3. Documentation 3.1 Bankruptcy-Remote Transfer of Financial Assets For a transfer of receivables to be valid under Dutch law: • the originator/seller must have the necessary power to dispose ( beschikkingsbevoegd ) of the receivables; • there must be a valid title ( geldige titel ) for the transfer of the receivables; and • there must be a valid delivery (levering) of the receivables. Although the receivables can be delivered by way of disclosed assignment ( openbare ces - sie ), which is carried out by way of notification to the underlying borrower, they are gener - ally delivered by undisclosed assignment ( stille cessie ). The undisclosed assignment must be recorded in a transfer deed that should either be in a notarial format and take place in front of a Dutch civil notary ( notariële akte ) or registered with the Dutch Tax Authorities ( onderhandse ger - egistreerde akte ) in order to be valid. In addition, for an undisclosed assignment to be enforce - able against the underlying obligors, the obligors must be notified of the assignment. Under Dutch (true sale) securitisations, the fol - lowing documentation facilitates a bankruptcy- remote transfer of assets:
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