Delaware (State of Delaware)
Delaware is the most commonly selected jurisdiction for the formation of Special Purpose Vehicles (SPVs), primarily due to its well-established legal framework, particularly the Delaware Limited Liability Company Act (Delaware Act). The Delaware Act is widely regarded as the statute of choice for sophisticated ventures organized as LLCs, especially for deals involving parties from multiple […]
Discount
In finance, a discount refers to the condition where the price of a bond or security is lower than its par or face value. The discount is the difference between the price paid for the security and its par value. In the context of a convertible note, the discount refers to the percentage reduction applied […]
Distribution
A payment made by a company to its shareholders, which may consist of stock, cash, or other assets such as crypto tokens. In the context of an SPV, a distribution refers to the allocation of capital gains and income from a portfolio company to the SPV investors. SPVs receive distributions from assets, such as portfolio […]
Doing Business
The term “doing business” refers to a legal condition where a business regularly conducts its normal activities in a state other than its original registered jurisdiction or has substantial contacts within that state. It also applies to having a presence in a state for legal and tax purposes. While SPVs are considered businesses, they are […]
Dossier
A collection of papers containing information on a particular subject or person.
DPA (Debt Payable by Assets)
A type of debt security, typically used in crypto token presales, that is payable through assets. DPAs may be issued to both accredited and unaccredited investors.
EDGAR (SEC Filing System)
EDGAR is the U.S. Securities and Exchange Commission’s online system for submitting and publicly accessing required filings. For SPVs, EDGAR is where organizers file a Form ID to obtain a CIK and CCC code, enabling future submissions. Once credentials are issued, EDGAR is used to file a Form D and other required disclosures tied to […]
EIN (Employer’s Identification Number, TIN, Tax Identification Number)
A unique identification number assigned to a business entity by the Internal Revenue Service (IRS) for tax reporting purposes. Commonly referred to as a Federal Tax Identification Number, the EIN is used to report taxes and identify the entity for various legal and financial activities. Banks typically require an EIN to open a bank account […]
Equity (Common Stock or Preferred Stock, Shares)
Equity refers to ownership in a company, typically represented by stock, that entitles the shareholder to a proportionate share of the company’s assets and earnings. The two most common types of equity are Common Stock and Preferred Stock. Preferred Stock is a class of ownership with a higher claim on the company’s assets and earnings […]
ERA (Exempt Reporting Adviser)
An Exempt Reporting Advisor is an investment adviser that is not required to register (like a Registered Investment Advisor) with the Securities and Exchange Commission (SEC) or state regulators, provided it meets specific qualifications, pays applicable fees, and reports public information through the Investment Adviser Registration Depository (IARD). Large advisers, with $100 million or more […]
Estimated Closing Date
The projected date by which the SPV Organizer anticipates completing the capital raise to reach the target fundraise amount. This date is significant for all parties involved, as it indicates when funds will be available for allocation to the target asset or project. The estimated closing date helps create a timeline for investors to finalize […]
ETF
A marketable security that tracks the performance of an index, commodity, bonds, or a basket of assets. ETFs are traded on stock exchanges and offer investors exposure to a diversified portfolio, typically with lower fees compared to mutual funds.
Exempt Offering
A securities transaction in which an SPV is not required to register with regulatory bodies, such as the Securities and Exchange Commission (SEC). Exempt offerings typically involve private placements or Regulation D offerings, where securities are sold privately to accredited investors rather than being offered to the general public. SPVs are mainly structured as exempt […]
Expense Reserve
An Expense Reserve is a separate account, typically established by the SPV Organizer in the Organizer’s name, used to collect funds from investors specifically for covering the SPV’s expenses. Investors are required to deposit their investment funds into the SPV’s main bank account and then contribute additional funds into the expense reserve account. This approach […]
Foreign LLC
A Foreign LLC refers to an LLC that is registered in a state different from the state where it is “doing business.” While most SPVs are initially registered in states such as Delaware, which offer favorable tax or fee benefits, an SPV may need to register as a Foreign LLC in the state where the […]