Part 1 - AL-Tax

Chapter 5a sub-trust. This would effect a second severance of the equitable title and constitutethe securitization vehicle the trustee of the reassigned assets for the benefitof the originator. Importantly, the conferral of the benefit of those assets on theoriginator involves the assignment of a severed equitable interest in the assets,not the existing interest held by the securitization vehicle and, consequently, it isarguable that there is no assignment of an existing equitable interest that must bereduced to writing. The above characterization is, however, not without risk. Oneneeds to inquire how a court might view a situation where the sole beneficiary ofa trust elects to create a sub-trust subsequently over part of the trust estate solelyin favor of the trustee! (The use of a trust analogous to the proceeds trust foundin retention of title clauses is unlikely to be of assistance: The creation of a singletrust with the originator as the trustee would still involve the assignment of anexisting equitable interest back to the originator, where assets that were originallyheld for the benefit of the securitization vehicle are nominated as now being heldfor the trustee’s benefit, and making the securitization vehicle the trustee would,again, involve a sub-trust.)5.9 ConclusionBanks and corporations routinely use securitization to raise funds and improvetheir balance sheets and, in the case of banks, manage their regulatory capitalrequirements. The most common form of securitization involves the sale of assetsto a securitization vehicle with the acquisition financed via the issue of securities.A key factor in the economic viability of these cash securitizations is achievingneutrality for the sale of assets as regards stamp duty or similar taxation impostson transfers of assets. It is possible to achieve that objective by structuring thesale of assets as an absolute assignment in equity.This is a vital aspect of both domestic and international securitizations. In manycases, the assets being securitized will comprise the multi-jurisdictional loan portfoliosof international commercial banks. In other instances, the securitization vehiclemay be established in a jurisdiction, such as an offshore jurisdiction, different tothe jurisdictions in which the originator and the securitized assets are located. Theissue that arises is thus not merely the efficacy and neutrality of the true sale underthe law of a single jurisdiction, but the efficacy and neutrality of the true sale underthe laws of the various jurisdictions in which the securitized assets are located, aswell as the capacity of the originator and securitization vehicle to execute the salefree from the risk of a claw-back on insolvency, under their own laws.109