SPEs are often structured such that the sponsor company has control over the SPE’s finances or operating activities while third parties have controlling interest in the SPE’s equity.
Whats the difference between control and controlling interest? Can someone clarify this? Thanks
They are the same in the sense that if I want to have control over a company, then I need to have a controlling interest over that company. You got it? In other words, I have the majority of rights in a company’s board, so I have control over the company.
A quick question… Why will a sponsor/mother company have a control over the finances of the SPE, considering the SPE is a seperate entity from the mother company?
Shouldnt the SPE be independent of the mother company completely?
It is usually in the SPE’s documents that they will “hire” the management company to handle all tasks, and the sponsor will have ability to deal with the finances/pay fees.
oh ic… thanks…