- Power of Attorney is a legal document that gives one person (the principal) the authority to act on behalf of another person (the agent) in certain matters.
- In the context of securitisation, a Power of Attorney is often used to give the special purpose vehicle (SPV) the authority to manage the underlying assets.
- The SPV is a legal entity that is created to hold the underlying assets and issue securities to investors.
- The Power of Attorney typically gives the SPV the authority to do the following:
- Collect payments from the borrowers
- Make payments to the investors
- Manage the underlying assets
- Take legal action on behalf of the investors
Here are some of the applications of Power of Attorney in securitisation:
- To manage the underlying assets: The SPV needs to be able to manage the underlying assets in order to collect payments from the borrowers and make payments to the investors.
- To issue securities to investors: The SPV needs to be able to issue securities to investors in order to raise capital.
- To take legal action on behalf of the investors: If there are any problems with the underlying assets, the SPV may need to take legal action on behalf of the investors.
Here are some of the benefits of using Power of Attorney in securitisation:
- It provides flexibility: The Power of Attorney can be tailored to the specific needs of the securitisation.
- It provides efficiency: The Power of Attorney can help to streamline the management of the securitisation.
- It provides certainty: The Power of Attorney provides certainty to the investors that the SPV will be able to manage the underlying assets and issue securities to investors.
Overall, Power of Attorney is an important tool in securitisation. It provides flexibility, efficiency, and certainty to the securitisation process.