A protection-based transfer of assets from one destination to another, usually through the use of offshore accounting.
verb. 1 Enclose (a piece of land) with a ring fence. Example sentences. 1  I have no problem with the County Council taking over the harbour if the Minister ring-fences the harbour land so that it is only used for the development of the harbour and is not sold off to pay a pension fund or benchmarking pay increases. The consequence is that the ring fence around the single market is only as strong as its weakest link, and that there is no second chance to impose limits on goods coming from a third country. A company may ring-fence poorly performing assets via a split in their company (for instance, a good bank / bad bank scenario). During the financial meltdown of 2008, some companies asked for the government to ring-fence certain poorly performing assets in order to move ahead with a merger. DEFINITION of 'Ring Fence'. A protection-based transfer of assets from one destination to another, usually through the use of offshore accounting. A ring fence is meant to protect the assets from inclusion in an investor's calculable net worth or to lower tax consequences. Moves to ring fence an asset are often called ring fence trades. Next Up Abstract: “Ring-fencing” is often touted as a regulatory solution to problems in banking, finance, public utilities, and insurance. However, both the precise meaning of ring-fencing, as well as the nature of the problems that ring-fencing regulation purports to solve, are ill defined. This article examines the functions and conceptual foundations of ring-fencing. up vote 6 down vote accepted. Since around the 1980's ring-fencing has been primarily a financial term, but the roots of the term are in the ring of fencing put around an area of land to confine livestock. So its core meaning is a comprehensive barrier protecting something. Definition of ring fence. In financial terms to ring fence is to remove a set of assets from a set of accounts and consider it separately. This could be done for a company or for an individual. Certain assets could perhaps be moved offshore which would lower that company's or person's tax liability.  In asset protection arrangements, ring-fencing can be employed through segregating specific assets and liabilities into separate companies of a corporate group. It can also be used as a method for mitigating liquidation risk or to improve a corporate credit rating.  Ring Fencing. The practice of a company creating a legal entity separate from itself in order to protect certain assets. For example, ring fencing may protect assets from taxation, regulation, or allow the company to hide it from creditors. Ring fencing often makes use of offshore accounting. It is usually legal, but there are limitations, such as maximum amounts that may be protected. For example, a firm may form a new subsidiary to protect, or ring-fence, specific assets from creditors. Case Study California's electricity deregulation of the late 1990s resulted in the state's electric utilities hitting the financial wall by 2001. ring fencing. The legal walling off of certain assets or liabilities within a corporation. For example, a firm may form a new subsidiary to protect, or ring-fence, specific assets from creditors. Case Study California's electricity deregulation of the late 1990s resulted in the state's electric utilities hitting the financial wall by 2001.
http://www.oxforddictionaries.com/definition/english/ring-fence http://www.davemanuel.com/investor-dictionary/ring-fencing/ http://www.investopedia.com/terms/r/ringfence.asp http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2228742 http://english.stackexchange.com/questions/65744/what-does-ring-fenced-mean http://lexicon.ft.com/Term?term=ring-fence https://en.wikipedia.org/wiki/Ringfencing http://financial-dictionary.thefreedictionary.com/ring+fencing http://financial-dictionary.thefreedictionary.com/ring+fencing
what is ring fencing