Legal Type
A company may form the SPV as a limited partnership, a trust, a corporation, or a limited liability corporation, among other options.
Usage
It may be designed for independent ownership, management, and funding. In any case, SPVs help companies securitize assets, create joint ventures, isolate corporate assets, or perform other financial transactions.
Do an SPV's assets and liabilities appear on the parent company's balance sheet?
No. Special purpose vehicles have their own obligations, assets, and liabilities outside the parent company. SPVs can, for example, issue bonds to raise additional capital at more favorable borrowing rates than the parent could. They also create a benefit by achieving off-balance sheet treatment for tax and financial reporting purposes for a parent company.
Summary