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Structured finance refers to complex financial transactions that involve pooling assets and issuing securities to investors. In Canada, structured finance is commonly seen in securitizations, asset-backed securities, collateralized debt obligations, and various project finance transactions. The legal landscape is shaped by a combination of federal and provincial laws, regulatory guidelines, and established market practices. Structured finance plays an essential role in capital markets, enabling businesses and financial institutions to manage risk, raise funds, and promote investment.
Structured finance transactions involve intricate legal, financial, and regulatory considerations. You may need a lawyer in situations such as:
Legal guidance helps protect your interests, reduce risks, and ensure the success and legality of your structured finance transactions.
In Canada, structured finance is influenced by several key legal and regulatory frameworks:
Canadian structured finance transactions are also influenced by market conventions, international agreements, and risk management standards such as Basel III for financial institutions.
Structured finance covers financial arrangements where assets or receivables are pooled and securities backed by those assets are sold to investors. Common transactions include securitizations, project finance, and collateralized debt obligations.
Typical participants are originators (sellers of assets), issuers (entities that issue securities), investors (purchasers of securities), credit rating agencies, trustees, and various advisers like lawyers and accountants.
Securitization involves transferring a pool of assets to a separate entity, often a special purpose vehicle, that issues asset-backed securities to investors, thereby raising capital for the originator and transferring certain risks.
Yes, both prospectus and exemption-based offerings require detailed disclosure about the underlying assets, risk factors, structure, cash flows, and the parties involved, in compliance with securities regulations.
Structured finance is primarily regulated by provincial securities commissions, such as the OSC and AMF. Federally regulated financial institutions may also be subject to oversight by the Office of the Superintendent of Financial Institutions (OSFI).
Yes, cross-border transactions require compliance with both Canadian law and the laws of the involved foreign jurisdictions, as well as potential tax, disclosure, and regulatory requirements.
Structuring typically aims to protect the pooled assets from an originator's bankruptcy, using bankruptcy-remote entities. Canadian bankruptcy laws must be considered for effective risk isolation.
Most transactions do not require pre-approval, but must comply with applicable securities laws, disclosure requirements, and sometimes notifications to regulatory bodies, especially for public offerings.
Challenges include regulatory compliance, tax structure efficiency, legal documentation, cross-border legal risks, and ensuring proper risk transfer and investor protection.
Look for lawyers or law firms with proven experience in structured finance, capital markets, and securitization. Consider their industry reputation, expertise in related regulations, and ability to advise on both legal and business aspects of transactions.
To deepen your understanding or seek assistance, you may find these organizations and resources helpful:
If you believe you need legal assistance with structured finance in Canada, here are some steps you can take:
Taking action early can help address complex regulatory requirements, minimize risks, and enhance the likelihood of a successful structured finance transaction in Canada.
