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Orphan structure

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Title: Orphan structure  
Author: World Heritage Encyclopedia
Language: English
Subject: Offshore trust, Bankruptcy remote, Offshore finance, Offshore financial centre, Finance
Collection: Finance, Offshore Finance
Publisher: World Heritage Encyclopedia
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Orphan structure

An orphan structure is a financing term referring to a company whose shares are held by a trustee on a non-charitable purpose trust. The company is said to be an "orphan" as it is not beneficially owned by anyone.

Orphan structures are usually used in offshore structures to ensure that the assets and liabilities of the subject company are treated as "off-balance-sheet" with respect to the sponsor of the structure. Other reasons for creating an orphan structure are to avoid or minimise regulation which might otherwise apply to a structure, and to ensure that the company is "bankruptcy remote" from companies in the same group as the sponsor.

Orphan structures are relatively common features of securitisation vehicles, where the asset backed bonds are issued by the orphan company.


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