Special purpose vehicle (SPV) is a legal entity – one of the financial structures, which is formed solely for a narrow, single, particular and specific purpose. Subsidiary might be a special form of SPV that exists before SPV, can stop liability, and have freedom of actions to do business like Philip Morris. Though, the difference between SPV and subsidiary is the full function in controlling the business. Subsidiary has completely full function while SPV does not do full range of business. In general, SPV is typically used by companies to isolate the firm from financial risk, to hide debt or ownership, to minimize bankruptcy risk and obscure relationships between different entities that are in fact related to each other.
Commonly, because of the financial risk of a large project, the company will transfer assets to the SPV for management and narrow the risks by putting the entire firm at stake. Most importantly, SPV is formed as a separate company that theoretically has no connection with the sponsor. In order words, the owner of SPV legally must show no relationship to the main company. Furthermore, besides all of the reasons listed above of establishing a SPV, securitization is a must known, which is used to securitize loans. Asset securitization provides another way for a company to raise cash in the capital markets as well as transfer risk of default on high-risk debt, such as credit card receivables. If asset securitization could be a desirable way for a company to raise cash, an experienced professional can help it evaluate whether the costs of transaction outweigh the benefits.
Limited company, cooperative structure, and trust are three basic forms of a SPV.

However, besides the great advantages of various forms of SPV, there are also disadvantages. To cooperative structure, minimum of seven members are required in registration. SPV in the form of