On The Legal Protection Of Contract-type Securities Investment Fund Holders' Interest

Since our country approves the establishment of the first group of investment funds in October 1991, China's securities investment fund has been developed rapidly in last two decades. Presently, the security investment fund has developed well and gathered brilliant achievements; the funds has reached the scale of giant trillion, and played more and more important roles in the national economy. However, compared with the developed countries' century-old developing history, China's securities investment fund market is an imperfect emerging market, and securities investment funds are still pure contract-type securities investment fund. While securities investment funds industry is rapidly expanding, there are still lots of actions which the fund manager violates the fund holder's interest. Unquestionably, these illegd threatal actions are disrupting the order of the securities market anening the health of the securities investment fund market. Drawing on past experience, it is safe to say that the protection of holders' interests should be honored as the cornerstone of the securities investment funds, failing which the industry will definitely lose momentum for further development. Therefore, how to protect the fund holder's interest and improve the existing system to ensure that the securities investment fund holder's interest be fully protected are important question that we must face. This article is precisely carrying out the research under this background and the full text is composed of four parts.The first part presents a brief overview of contract-type securities investment fund. This part has mainly outlined the securities investment fund meaning and the characteristic; it has also analyzed contract-type securities investment fund legal attribute; it points out although the securities investment fund have the difference with the general trust, but its essence has not been separated from the trust system's essential connotation and its foundation's legal relationship is still the trust legal relationship. In the end, it introduces our country securities investment fund operating patterns and the fund litigants.In the second part, the author has analyzed the theory of contract-type securities investment fund holders' interests protection . First of all, the author elaborated the fund holders' interest protection necessity and the validity. Secondly, the author has analyzed the fund holder's interest protection legal cornerstone is the fund contract, compared different patterns which construct the legal relationship between fund litigants of various countries, and has pointed the pattern which our country adopts. Finally, the author introduces the rights and obligations of the fund holders.The third part shows many essential points of this article. The author has analyzed the current situation of our country contract-type securities investment fund holders' interest protection, and pointed out that although our country already constructed relatively perfect fund legislation system, but the protection's condition of fund holder's interest does not have the effective improvement, the actions of fund manager against the interests of fund holders often happen. The author thought the mainly reasons that creates this kind of situation are listed below. The first reason is that the interior management structure of fund management company is unable to protect the holders interest effectively; the independent director system and the inspector system are placed the great expectations, but has not been able to play the role effectively. The second reason is that the fund trustee has the supervisory duty, but because the defects of selection mechanism and realizes the watch-dog function system safeguard deficient to cause the inspector to be incapable. The third reason is that the fund holders disperses highly, the universal existence's rational indifferent and free-rider psychology cause fund possessor incapable active oversight fund managers, and the fund holder conference becomes a mere formality. The fourth reason is that the external supervision of fund is insufficient. The main performance is that the government administration supervision is not in place and overemphasizes the administrative supervision to neglect other supervisory mechanism function.The forth part mainly focus on contract-type securities investment fund holders' interest protection legislative suggestion. First, solving internal governance structure of the fund management company can't protect the interests of fund holder effectively; we should reforms fund company inspector-system in order to enable inspector oversight fund management company's internal risk control situation and the fund operation situation. At the same time, improving independent directors system and using the nomination way of the independent director must be reformed. Also, we need to cut off the economic ties between the independent directors and the fund managers. Firstly, we must expand the proportion of independent director in board of directors and the scope of verification tem. Regulatory authorities should be prescribed for the qualifications of independent directors, and strengthening the supervision of independent directors. Secondly, we should reform the selection process of fund trustee and expand the fund trustee's surveillance scope in order to realize the fund trustee powerful surveillance. Thirdly, in order to solve the problem of fund holder conference's formalism, the author suggested that we should strengthen institutional investor's function and consummate the voting right agent machine system. On the other hand, we should build up the Legal loophole of the possessor congress system. Finally, to deal fund exterior supervision's weak strength, the author suggested that we should strengthen the government supervision. And on the other hand, we should strengthen self-discipline, and enable it as the role of the supplementary regulation. At the same time, it is necessary to make advantage of functions of intermediary institution-centralized of organizations to play any effective complementary regulation.