The basic definition of a securitisation company is a company that is1:
(a) party as debtor to a 'capital market investment' (CMI) in respect of which securities are issued and which is part of a 'capital market arrangement' (CMA), and meets other specified conditions; or
(b) involved in the CMA in some other way
The first requirement therefore is for it to be part of a CMA involving a CMI. These terms have specific legislative and regulatory requirements, and take their meanings from the Insolvency Act 1986, s 72B(1), Sch 2A2.
The definition of a CMA is set out in detail in Schedule 2A. The part of the definition that is normally relevant in relation to a securitisation requires a grant of security to a person holding it as trustee for a person who holds a CMI issued by a party to the arrangement. A CMI is defined as a rated, listed or traded investment within the Financial Services and Markets Act 2000 (Regulated Activities) Order 20013 art 77. Article 77 covers debentures, loan stock, bonds, certificates of deposit and other debt instruments. Broadly speaking then, a CMA typically involves the issue of securities to third party investors and which are rated by an internationally recognised agency and traded on a recognised exchange.
A new company set up on or after 1 January 2007 as a securitisation company is within the regulations from the outset and the normal rules on when an