Study Of Securities Investment Funds The Interests Of The Holders Of The Protection Of Legal Mechanisms

Securities Investment Funds (SIFs) play the role of foremost institutional investors in the securities market. The fund holders, however, are vulnerable to infringements and abuses because of inherent risks involved in the trustor-trustee relationship, which has been adopted as the operative mode of SIFs. Drawing on past experiences, it is safe to say that the protection of holders' interests should be honored as the cornerstone of the SIF industry, failing which the industry will definitely lose the momentum for further development. Admittedly, defects are pretty obvious in the legislation, operative mode, and supervisory practices concerning the SIFs in China. Having said the above, the author is going to conduct a comparative study of protective mechanisms under different operative modes and then put forward some proposals in establishing a framework for protecting fund holders in China.Based on operative modes SIFs can be divided into corporate funds and contractual funds. Corporate funds are formed in accordance with the Company Act and the fund holders are shareholders at the same time. Shareholders' meeting and board of directors are also indispensable. In addition the board plays the central part and is authorized to choose investment consultants (i.e., fund managers), to determine management fees to be charged, and to sign management agreements with such consultants on behalf of the fund holders. By contrast, contractual funds center around fund managers. The rights and obligations between holders, managers and trustors are to be defined by contracts. This dissertation will probe into a leading case in this area, and elaborate on major problems relating to contractual funds in China. That is, fund holders exist only as scattered individuals and never as organized groups with common interest, which significantly undermine their ability in counteracting the other two parties in the SIF game.Protections available to fund holders differ in terms of legal rationale and means. For corporate funds, fund holders are also shareholders; while under contractual funds the holders are one of the three parties to a contract. Different legal status understandably leads to different interest relationships and different protective mechanisms. For corporate funds, holders can resort to remedies provided by the Company Act to safeguard their interests; while for contractual funds, holders rely on contract law and contract terms. This dissertation also briefly analyzes the theory of...