Special-purpose vehicle
A special-purpose vehicle is formed for a limited purpose, such as holding assets and issuing securities in a securitisation. Its role can help isolate contractual cash flows and risks, but its legal separation does not automatically determine accounting consolidation or eliminate the originator's exposure. Investors and advisers evaluate asset ownership, servicing, governance, credit support and the priority of claims. The term describes an entity's purpose and structure rather than one universal legal form.
Worked example
An SPV acquires a pool of receivables and issues notes whose payments depend on collections. The originator continues servicing them, so the contract and applicable reporting rules must be examined to understand remaining risks and control.
Common mistake
Assuming every SPV is automatically outside the sponsoring group's consolidated statements or has no independent obligations.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Direct | September 2026–June 2027 |