The Law of 22 March 2004 lays down the legal framework that allows securitization vehicles (SV's) to be created. Securitization allows a" transferor" such as a company or person, to transfer to a Securitization Vehicle those risks linked to debt instruments, or to other assets, or to commitments undertaken by third parties partially or in full, inherited in business activities thought the issue of stocks or bonds whose value or yield is directly linked to such risks or activities.
These risks are represented by registered or bearer securities such as stocks, bonds or certificates representing the income that is generated.
There are two types of Securitization Vehicles offered in the Luxembourg market. A Mono Fund or a Dual Fund.
Fermion Equity Fund is registered as a Securitization Fund, more specific, a Mono Fund and structured as an Umbrella Fund.
Securitization Law allows for individuals or companies to make partial withdrawing of their wealth and placing it with Fermion Equity Fund to avoid having to undertake the risk of holding and managing those assets. Investors finance Fermion Equity Fund issuing the securities and it that way bear the risk of the assets Fermion Equity Fund holds.
The Law include all transactions whereby Fermion Equity Fund acquires or assumes a risk linked to an asset. Financing is achieved by issuing shares,bonds or any other types of securities (certificates, EMTN's or subordinated loans)
By force of Law all the following types of assets my undergo Securitization: Commercial Debts, mortgages, current accounts, shares, debenture loans whether subordinated or not, any immovable asset( including real estate or rights in rem) , activities with a certain and reasonable income as well as activities with a future income. By request,tracker certificates may be issued by Fermion Equity Fund.
Obligations and conditions for approval by the CSSF
As long as Fermion Equity Fund does not issue stocks and bonds aimed at the general public on a continuance basis, we do not need CSSF (Commission de Surveillance du Secteur Financier) approval. The same applies to the Management Company: Fermion Capital Sarl.
"Continuance": issues more than once per calendar quarter (4 times per year)
"General public": public advertising, i.e. newspapers, television, radio. Investors that do not invest more than Euro 125 000.00 per person.