NETHERLANDS Law and Practice Contributed by: Mandeep Lotay and Dámaris Engelschman, Freshfields LLP
• Article 6 enhances a “skin in the game” model; by imposing the obligation on the originator, sponsor or original lender to retain a certain percentage of the total amount of transferred risk, investors should be protect - ed from moral hazard risk; • Article 8 bans re-securitisations, the aim being to ensure the quality and integrity of the transferred assets; • Article 9 sets stringent parameters for credit- granting criteria; and • Article 5 provides for a certain form of self- protection, as institutional investors are sub - ject to due diligence requirements which must be fulfilled before the allocation of funds. 4.9 Banks Securitising Financial Assets Principal legislation applicable to banks that securitise (some of) their assets or hold positions in securitisations on their balance sheets contain the EU Securitisation Regulation, CRR III, the Dutch Financial Markets Supervision Act ( Wet op het financieel toezicht , or FMSA), the Dutch Civil Code ( Burgerlijk Wetboek , or DCC) and the Dutch Bankruptcy Act ( Faillissementswet ). 4.10 SPEs or Other Entities The Dutch legal framework does not provide much specific legislation with respect to SPVs. In securitisations that relate to consumer receiv - ables, the Dutch regulatory framework does pro - vide for an exemption of the normal licencing requirements for “servicing consumer credit” if the SPV expedites such servicing to a third party that holds the relevant licence (usually the originator). 4.11 Activities Avoided by SPEs or Other Securitisation Entities There is no legislation under the Dutch legal framework that pushes SPVs to avoid certain activities. However, it is common for transaction
parties under a Dutch securitisation transaction to limit the SPV’s capacity to undertake other activities than those in relation to the securitisa - tion transaction(s) in order to optimise the SPV’s assets to the benefit of its counterparties under the securitisation transaction(s). 4.12 Participation of Government- Sponsored Entities Government-sponsored entities currently do not participate in the Dutch securitisation market. 4.13 Entities Investing in Securitisation A variety of entities invest in securitisations in the Netherlands. These include pension funds, banks, investment funds and insurance compa - nies. As set out under 4.8 Investor Protection , investors are subject to a due diligence obliga - tion with respect to the securitisations that they invest in. 4.14 Other Principal Laws and Regulations See preceding sections. 5. Synthetic Securitisation 5.1 Synthetic Securitisation Regulation and Structure Synthetic securitisations are permitted in the Netherlands. Similar to the legal framework for traditional securitisations, there are no specific Dutch laws or regulations applicable to synthetic securitisations. The main legal framework for syn - thetic securitisations includes the EU Securitisa - tion Regulation, CRR III and, possibly, the EMIR. Dutch synthetic securitisations usually aim to transfer the risk of underlying exposures to an external investor or investors but without trans - ferring legal ownership of these exposures.
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