Comparative Study On The Development Of The Trust Industry And Related Legislation Between Taiwan And Mainland China

April 7 2004Comparative Study on the Development of The Trust Industry and Related Legislation between Taiwan and Mainland ChinaAbstract of Master ThesisThe trust system has its root in the Anglo-American equity law system, and has been incorporated by the continental legal systems of Japan and South Korea. Trust is a system for the assignment and management of assets, and has the advantage in the efficient use of transaction cost. The industry of trust operation is profit-oriented. Therefore, trust enterprises and institutions perform the social function of managing money in the society.In this study, the comparative method is used to evaluate the development of trust as an industry in Taiwan and Mainland China. The legislation of the trust industry on the two sides were compared and discussed. The implication and the prospect of such legislations will also be discussed in the five chapters of this study.Chapter I :Introduction: Highlight of the motive and objective of this studyA description will be given of the scope of the study, the methods used and the theoretical framework. An overview of the study will also be provided.Chapter II :Introduction: The practices of the trust industry in Taiwan and Mainland China and the development experienceThe origin, features of operation and the development experience of the trust industry in Taiwan and Mainland China will be discussed, including the problem of "Improper operation and indiscriminating direct investments". The the authorities policies for dealing with this problem, the development of trust products, and the market size of the industry will also be considered in this study. Finally, an assessment on the effect of the trust industry toward the banking industry will be made.Chapter III:Comparing and reviewing the legislation of trust business in Taiwan and Mainland China.The gravity of this chapter is on the legislation pertinent to the trust industry in Taiwan and Mainland China. In Mainland China, trust companies were considered in Chapter IV of the draft version of the Trust Law. Seeing that the infrastructure and related regulations for the trust industry were not mature enough, the Development Research Center of the State Council (DRC) and related government agencies proposed to delete this part of the legislation. Eventually, this part came to be removed from the drafted law. This chapter will provide a description on the legislative process of trust companies, which will include the so-called "one law and two regulations". The one law shall be referred to as the "Trust Law" coming into full force on October 1, 2001. The two regulations shall be referred to as the "Regulation for the Management of Investment Trust Companies" and the "Provisional Regulation Governing the Investment Trust Company Operation of Trust Funds". Putting it more precisely, the Trust Law regulates the rights and obligations of the parties concerned in a trust relation whilst the two regulations actually govern the operation of the trust industry. As such, the focus of study will be on the two said regulations.In Taiwan, there was a similar legislative process. There, the major axis of study on the side of Taiwan will be the legislative process of the trust industry and the "Trust Industry Law promulgated in 2000.The facets of comparison of the legislation of the trust industry in Taiwan and Mainland China will cover the origin of the legislation, the form of legislation, the preamble, the establishment of the trust industry, modification and termination, the scope of the trust industry, the rules for the operation of trust companies, and applicable legal rules to the industry. Recommendation will be given after the analysis on each of the said topics.Chapter IV:Recommendation for the development of the trust industry in Taiwan and Mainland China, which will be based on existing legal rules governing the industry and the problems from the practices in this industry.This study is an attempt to urge Mainland China to promu...