Securitization

A securitization company is a legal entity established to assume risks associated with assets (in full or in part) by issuing securities whose value or yield depends on these risks. Securitization companies in Luxembourg can take the form of a public limited company (SA), partnership limited by shares, limited liability company (SARL), or cooperative organized as an SA. They operate under the commercial law of August 10, 1915, unless organized as a cooperative.

• Compartments: The company’s statutes may allow for the creation of multiple distinct compartments, each of which can be independently liquidated
• Statutes and Administration: The company’s statutes, management regulations, or issuance documents are governed by the securitization law. These documents specify the modalities for asset transfers within the company. The registered office must be located in Luxembourg
• Tax Regime: Since January 1, 2009, no incorporation tax applies to the formation of a securitization vehicle. The corporate income tax (IRC) is levied at a global rate of 17%, following standard profit taxation. The taxable base includes all costs, including obligations to investors and creditors. Companies in Luxembourg City are subject to an additional municipal business tax (ICC) at a rate of 6.75%, which varies by municipality. A minimum wealth tax applies depending on asset composition and balance sheet total
• Investor and Creditor Protections: Securitization companies issuing securities to the public on a continuous basis are subject to CSSF oversight (authorized securitization entity). The management report must disclose all asset information affecting investors’ rights, and auditors are required to report any irregularities or inaccuracies. Investors’ and creditors’ rights are limited to specific assets or compartments, unless stated otherwise

• No restrictions on undercapitalization ratios
• Securitization companies benefit from double tax treaties
• They may issue securities of unequal values or with repayment subordinated to other securities or categories of shares
• Voting rights of shares of unequal value are proportional to the share of capital they represent, unless otherwise specified