Key Mainland China and Hong Kong SAR Regulatory Issues when Structuring Repackaging Transactions

Secured limited recourse notes issued by an orphan special purpose vehicle (SPV) (commonly known as “repackaging”) is a versatile product which enables investors to get an exposure to underlying assets they may not otherwise be able to invest in directly or in a way that better meets their desired investment profile. The underlying assets that secure the notes may be sourced in the secondary market or originated by the arranger of the notes or its affiliates.
Despite the flexibility of repackagings, there are certain regulatory pitfalls that potential arrangers or investors should be aware of when structuring or purchasing repackaging products. We explore some of the commonly encountered Mainland China and Hong Kong SAR regulatory issues in our Bulletin.

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