CHINA Law and Practice Contributed by: Borong Liu, Xiaoli Liu, Jingyi Lu and Zhijie Zhang, Zhong Lun Law Firm
• holding and managing asset pools; • distributing SPV assets to investors or credi - tors of the SPV; • convening a security holders’ meeting, if necessary; • supervising other institutions providing ser - vices to the SPV; and • taking measures to protect the interests of investors. 2.2 Sponsors In a credit asset securitisation, the underlying assets are often originated by the originator itself, although there is no restriction on pur - chased assets in the regulations. In contrast, the role of sponsor separated from originator has emerged in recent years in business asset securitisations. For example, factoring compa - nies often purchase accounts receivable in the form of factoring and securitise these assets in the markets. Another example is the trust com - pany, which may be a sponsor of a securitisa - tion where the asset pool is comprised of loans originated by itself or purchased from other trust companies. In either case the underlying assets are served by the same asset servicer and the same eligibility criteria apply. The regulations set no special requirements on a sponsor, so a sponsor’s responsibilities are no different from those of an originator (for details please see 2.3 Originators/Sellers ). 2.3 Originators/Sellers Role of the Originator Originators transfer underlying assets to an SPV by means of sale or trust. In credit asset securitisations, the originator/sponsor is a finan - cial institution that originates credit assets and transfers them through the establishment of an SPT. Only financial institutions approved by the NAFR can act as originators. These include
commercial banks, policy banks, automobile finance companies, consumer finance compa - nies, financial leasing companies and financial asset management companies. In business asset securitisations, the origina - tors are basically non-financial enterprises from a range of industries, with limited exceptions for financial institutions such as trust companies and financial asset management companies. Originator’s Responsibilities The responsibilities of an originator mainly include: • providing underlying assets that meet the eligibility criteria; • redeeming or replacing the ineligible underly - ing assets; • co-ordinating and supporting the issuer and related intermediaries in performing their duties; • maintaining a risk retention of the underly - ing assets (exemptions are given to qualified business asset securitisation); • providing relevant disclosure information to the issuer and related intermediaries in a timely manner; and • ensuring that the information provided is true, accurate and complete. If the cash flows of the underlying assets depend on the continued operation of the originator, then the originator shall commit to maintaining normal operation throughout the life cycle of the secu - ritisation, and to supplement the shortfalls in the cash flow of the underlying assets. 2.4 Underwriters and Placement Agents Role of the Underwriter An underwriter or placement agent is an insti - tution responsible for the promotion and sale
38
CHAMBERS.COM
Powered by FlippingBook