CFM20370 - Securitisation: taxation: periods beginning on or after 1 January 2007: the regulations: meaning of a ‘securitisation company’
What is a securitisation company under the regulations?
Regulation 4 defines a securitisation company as one of five
types of company. The descriptions of such companies are based on
those used in FA05/S83 in relation to the companies to which UK
GAAP may continue to apply (
CFM20210), but the detailed qualifying
characteristics for each type are not wholly the same as those in
FA05/S83.
The five categories are
- a note-issuing company (regulation 5)
- an asset-holding company (regulation 6)
- an intermediate borrowing company (regulation 7)
- a warehouse company (regulation 8)
- a commercial paper funded company (regulation 9).
Securitisations are frequently structured through a chain of
companies. The key company in the securitisation tax regime is the
‘note issuing company’, that is, the company that
issues the securities to the investors as part of the capital
market arrangement. The other four companies are companies that are
involved in some other way in the capital market arrangement.
In simple securitisation structures, the note issuing company
and the asset holding company may be the same company, and there
may not be an ‘intermediate borrowing company’, a
‘warehouse company’, or ‘commercial paper funded
company’.
Retained profit
A securitisation company, as defined above, must have provision for a retained profit (regulation 4(3)). Regulation 10 sets out the definition of ‘retained profit’ ( CFM20470). The requirement to have a retained profit means that there must be provision for a retained profit under the documentation for the related capital market arrangement.
