Special Purpose Vehicle (SPV)

Shuraa Business Setup29 May, 2024Business

A special purpose vehicle is a subsidiary established by a parent company to segregate financial risk. It is also known as a special purpose entity (SPE) or bankruptcy-remote entity as its obligations remain secured even if the parent company goes bankrupt. The main purpose of creating such an entity is to carry out a risky venture while minimizing any negative financial impact on the parent company or its investors. In short, it is a holding company formed for the securement of debt.