The Securitisation Law allows the securitisation of an
intangible asset such as copyright and the risks/income
linked to these royalties.
Step 1
Let's take an author/composer who owns a catalogue of original
works that from time to time generates royalties derived
from his intellectual property rights.
Step 2
He can securitise his copyright, transferring his copyright
to a securitisation vehicle.
External investors can finance the securitisation vehicle.
These subscriptions fund the purchase of the copyrights
while the investors receive securities in return for their
investment.
The securitisation vehicle pays the author or composer the
price for the acquisition of his intellectual property rights.
The author is no longer owner of these rights; the securitisation
vehicle becomes the sole owner.
Step 3
All income deriving from the granting of these copyright
licences are payable to the securitisation vehicle which
will assume the operating expenses linked to this ownership.
Each investor will receive dividends in proportion to the
number of shares that he holds in the securitisation vehicle.
Advantages
Any person (natural or corporate) can transfer their intellectual
property rights to a securitisation vehicle without limitation
on the type of right or the amount of the transaction.
This operation allows the Transferor (author) to transfer
his rights (and for a company to remove them from the balance
sheet) which were generating risks or income and which he
wishes to customise in a special purpose vehicle. From the
time copyright is granted, he receives a fixed amount, although
discounted. Therefore he receives a unique source of capital
which will not suffer from the fluctuating royalty payments
received by the securitisation vehicle.
The investors, via the securitisation vehicle, assume the
risks linked to the future payment of royalties. Should
the securitisation vehicle receive more than the initial
investment capital paid to the author, it will distribute
the profit to the investors. Should the securitisation vehicle
get less than the initial investment capital paid to the
author, the investors will assume the loss.
The holders of the securities issued by the securitisation
vehicle may transfer, give or sell their shares to other
shareholders, who will receive dividends linked to this
activity and, in the future, any possible proceeds arising
from the liquidation of the vehicle (for example the resale
of the copyrights to a third party).
This method enables risk to be spread between several investors,
who, via the securitisation vehicle will be able to acquire
a share in the securitised rights.
This transaction allows a group of individual investors
to acquire an asset without having to bear the full investment
alone.
This securitisation process also allows the transformation
into securities of the copyrights of authors or composers
that, by definition, are linked to their original creator.
