PORTUGAL Law and Practice Contributed by: Benedita Aires and Orlando Vogler Guiné, VdA
entailed obtaining approval of the prospectus for the offer of the notes from a competent regulator outside Portugal. For these reasons, the Portuguese securitisa - tion market has generally only seen transac - tions using the other type of SPE (the STC) since 2008, which is considered in more detail below. STCs STCs have the special and unique legal purpose of acquiring receivables and issuing notes (called securitisation notes) in the context of securitisa - tion transactions carried out under the Securiti - sation Law. They are limited liability commercial companies, set up under Portuguese company law and legally framed under limited-recourse principles set out in the Securitisation Law. They are supervised by the CMVM, which authorises their incorporation, undertakes a fit and proper assessment of their shareholders and corporate body members, and monitors their own funds requirements. Besides a minimum share capital of EUR125,000, STCs must have additional own funds (typically ancillary capital contributions with the features of regulatory capital under the CRR), which, in practice, are set in light of a certain percentage of their annual fixed expenses or a certain per - centage of the amount of the securitisation notes issued by them, whichever is highest. Whenever a new securitisation is entered into, the STC shall confirm in advance whether it will have sufficient own funds to cover the additional requirements stemming from the new transac - tion and new notes to be issued; if not, it must increase its own funds by the necessary amount. STCs are multi-securitisation SPEs, operating on a silo-by-silo basis. Each securitisation trans -
action corresponds to a separate silo, without cross-contamination across silos. When entering into a transaction, the STC will acquire a receiva - bles portfolio and fund it through the issuance of securitisation notes, normally tranched in two or more classes. This receivables portfolio will be used to pay the liabilities under the issued securitisation notes, with the notes only being repaid by means of the cash flows generated by the receivables portfolio. Since these are notes, these ABS can be placed and held directly by the investors as debt instruments, without the need to employ a double structure, as is the case with the FTCs described above. In light of the Securitisation Law, and notably the concept of autonomous estates exclusively allo - cated to the security holders and other creditors of the transaction assets of a given securitisa - tion, any assets and liabilities pertaining to the securitisation will not be consolidated with the originator, the parent or an affiliate in the case of the former’s insolvency. 6.3 Transfer of Financial Assets Assignment of Receivables The assignment of receivables between the assignor and the assignee (ie, the originator and the issuer) is effective upon execution of the assignment agreement, which is in line with general law. However, under the Securitisa - tion Law, as a general rule (ie, covering most types of originators active in the market, includ - ing the state, the social security, credit institu - tions, financial companies, insurance companies and pension funds or pension funds manage - ment entities), the assignment is also effective towards the debtors (ie, the borrowers, who owe the receivables that have been assigned) upon execution of the receivables assignment (sale) agreement without notice to the debtors, whereas under general law the debtors would
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