What is SPV? Private Limited Vs LLP as a SPV in Fractional Ownership

As a curious investor, do you wonder about Special Purpose Vehicles (SPVs) in Fractional Ownership? How fractional investment works, what role SPVs play, and how they manage risk? If Yes, Click ▶ above

In the video, we're breaking down everything about SPVs in fractional ownership for you. We've compared Private Limited companies and Limited Liability Partnerships (LLPs), explaining governance, equity, and legal stuff, in the context of SPV in Fractional Ownership!

ABOUT OUR SPEAKER KRUPA JOISAR

We have Krupa Joisar a company secretary and fellow member of the Institute of Company Secretary of India and LLB graduate from the government law college GLC Mumbai. She's passionate about corporate laws and has worked with a reputed practicing CS firm and got hands-on experience with leading India's largest corporate sectors that is construction industry, handling, corporate restructuring, legal due diligence, drafting agreements, rendering opinion on diverse issues under companies Act, FEMA, NBFC, and has represented our clients before. Worked for NCLT, SEBI, RBI for more than nine years. She has a passion and commitment towards her work and thus empowering her firm and all the stakeholders.

What is a SPV (Special Purpose Vehicle)?

SPVs, or Special Purpose Vehicles, are basically entities set up for a specific purpose. Imagine a real estate bigwig creating an SPV, like a Limited Liability Partnership (LLP) or a Private Limited company, just to handle a particular project. These SPVs are laser-focused on their mission, acting as a vehicle to achieve their goals.

In the world of Fractional Ownership in real estate, SPVs are often used to snag and manage property assets. But here's the catch: these SPVs gotta stick to their main gig. Investors want to know they're not veering off track.

What SPV structures are there for fractional ownership?

Before understanding which way is better, its important to know what SPV structures are there for fractional ownership?

There are three SPV structures, Private Limited companies, LLPs, and Partnerships.
The first two are top picks because they offer limited liability, which is great for managing risk.

When it comes to choosing between a Private Limited company and an LLP as your SPV, there's a lot to think about. Both have to follow rules set by the government, filing documents that anyone can check online. This transparency helps investors know what they're getting into.

🕘Timestamps:

0:00 Intro
1:04 What is a SPV ( Special Purpose Vehicle)?
3:35 What are the different SPV structures possible in Fractional Ownership?
4:23 Essence of choosing Private Limited or LLP as a SPV in Fractional Ownership?
5:42 What are the features of Private Limited as a SPV in Fractional Ownership?
6:33 What are the features of an LLP as a SPV in Fractional Ownership?
7:30 Who runs the show in an LLP SPV in Fractional Ownership?
8:15 Private Limited Directors VS LLP Designated partners who has more power?
9:30 Can the director or designated partner sell the SPV/the company without consent?
12:25 Can Shareholders and Directors OR partners and designated partners swap roles?
13:59 Do directors/designated partners have to own a stake in the company?
OR
Can independent directors/designated partners be brought to run the SPV?
15:16 Should asset managers have an ownership stake in the SPV?
19:31 Max no of directors/share holders/partners/designated partners allows in SPVs?
20:49 LLP VS Private Limited difference from a fractional real estate perspective?
22:36 Understanding equity and debentures in a Private Limited for Fractional Real Estate
24:12 What are the different type of debentures?
25:10 Secured Unsecured Convertible or non convertible debentures are best for fractional real estate?
26:49 Role of a debenture trusteeship in a private limited for fractional real estate
27:41 How do I know debentures issued to me are secured or not?
29:56 Is the Share holding document (SHA) the most important document for investors? Why?
31:08 Can LLPs have Share Holding agreements?
32:16 What is safer LLP OR Private Limited structure for an investor?
33:45 For resolution of litigation is LLP better or Private Limited in Fractional Real Estate context.
35:39 Finally, Private Limited or LLP SPV structure for Fractional Real Estate?
37:19 LLP or Private Limited for NRIs from FEMA Perspective for Fractional Real Estate?
38:38 Word of advise for investors when investing in fractional real estate ownership opportunities

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