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SECURITIZATION IN THE DUTCH CARIBBEAN

The Netherlands Antilles are an attractive jurisdiction

Netherlands Antilles (a.k.a. Dutch Caribbean) special purpose vehicles (“SPVs”) are commonly used in both cross–border financing transactions as well as in Netherlands Antilles domestic financing transactions.

As regards cross–border transactions, (synthetic and cash) securitizations, repackagings, collateralized debt obligations (“CDOs”) and collateralized loan obligations (“CLOs”) and leasing transactions, MTN and other note issuance programs are among the most popular transactions involving a Netherlands Antilles SPV.

There are a number of reasons why the Netherlands Antilles are an attractive jurisdiction in which to set up an SPV in structured financing transactions. The first of these is the favorable Netherlands Antilles tax regime.

Investor considerations also often drive the SPV location. The Netherlands Antilles are a so called associate member of the EU, which makes a Netherlands Antilles SPV attractive to European investors. Also, the Netherlands Antilles (Curacao) is not listed on any black-list (OECD, FATF).

A Netherlands Antilles SPV can have the form of a B.V. (‘besloten vennootschap met beperkte aansprakelijkheid‘), which is a private limited liability company. To make the SPV an orphan company its shares are typically held by a Netherlands Antilles foundation (‘stichting‘). The foundation can be set up within a day and has the power and capacity to hold the issued share capital of the SPV. A foundation does not have any members or shareholders.

A Netherlands Antilles SPV is not required to obtain a banking license nor any consent or authorization from the regulatory authorities for the issue of the SPV notes, provided that the SPV funds itself for at least 90% from:

1. professional market parties (“PMP’s”); or
2. group companies,

provided that if bearer securities are used for such exempt funding (“Exempt Funding”) with a denomination of less than Naf. 100,000.-, a selling restriction should be used to prevent issue or transfer thereof to others than Group companies or PMP’s.

Netherlands Antilles Banking regulations do not restrict the SPV from purchasing any assets anywhere in the world and such assets do not have to be held or located in the Netherlands Antilles upon acquisition (tax reasons could restrict this freedom). It can purchase (participations in) existing loans, grant new loans, acquire debt for equity securities (including asset–backed or CDO securities).

There is no prospectus requirement in the Netherlands Antilles in respect to the issue of debt securities. Furthermore, there are no requirements relating to “continuous disclosure”, e.g. publication of price-sensitive information. In case the SPV is set-up as a fund because it issues participation rights to investors, it should be noted that such fund will most likely not qualify as investment company under Netherlands Antilles law. If CLN’s are issued, the SPV cannot be considered to be an investment company, as it does not have ‘participants’. In such case, however, a special dispensation should be requested for the issuance of CLN’s.

Karel Frielink
Curacao-based Attorney (lawyer) / Partner