Securities Investment Fund Contract Structure Theory

As we know, Securities Investment Fund is a manner of investment with the professional management of the assets, the profits and risks being shared, to concentrate the investors funds by issuing the fund unit, and transfer the funds to fund trustee to keep in custody and managed by manager of the fund. In general manager of the fund invests the fund to the stock markets. As the investment risks would be decentralized and the professional managements of the funds, Securities Investment Fund is popular rapidly and becomes one of the most important investment tools.The legal basis of Securities Investment Fund is trust; it is the extension of trust in the business field. Trust is a manner of property management with great flexibility and great room for further development. The heart of trust system is the separation between the ownership of trust property and the benefit right of trust property. One side the ownership of trustee is acknowledged, and the other side the beneficiary can enjoy the benefit from the trust property and be protected by the design of the trust legal form. Therefore regularizing Securities Investment Fund by the trust legal form, making fund law relation clear, for safeguarding benefits of the investor, promoting the fund industry healthy and stabilized development, is very important in China. The fund develops to the higher level in following nations, such as England, the United States, Germany, Japanese etc. in addition to fixing Securities Investment Fund position on the trust legal system, regulate and conduct it by drawing the specialized fund law. The contractual structure of matching its own state of the nation is also the fundamental reason of fund industry booming development of the above-mentioned national, studying and comparing the developed contractual structure of Euro-American national, is provided with cognizing and drawing lessons to us. Remarkably, because of the differentiation of the politic, economy and law culture, the fund contractual structure have the special features. We can utilize the advanced experience of the abroad in aftertime to the lawmaking of the fund, couple the actual circumstance, perfect our contractual structure of Securities Investment Fund.The types of trust are developed and innovated with the social economic conditions. Securities Investment Fund is the product of the great developments in securities markets. Even though Securities Investment Fund is the product of trust, it possesses some unique characters differed with trust. Fund management and custody embody such characters. Manager is in charge of the management of Securities Investment Fund and trustee is responsible of the custody and the contract is to be made first by the manager and the trustee, the investor joins in the contract by recognizing the fund share, possesses beneficiary's right. But there is no such division function of the work in civil trust. In the field of academic field, as to the legal relationship in the securities investment trust, there are disputations, hereof, the united theory and the separated theory.The separate theory divides 2:one believes the original ownership of the fund property should be the investor all doubtless, the investor becomes the beneficiary through delivering the fund property to manager based on the trust of professional ability, So the trust deed exits between them. At the same time, to guarantee the safety ofthe fund property, the manager devolve another party who takes care of the safekeeping of the fund property, eventually, clientage stands alone from the above trust deed. The other insists the manager and the trustee sign the trust deed from the actual operation, the investor is to recognize the fund share to join the deed , being placed in the beneficiary's position in the contractual structure, the trustee take the charge of the investor. But the manager's fiduciary duties is not only based on trust but also founded on building up another a contract through recognizing the fund share between the manager and the investor. The united theory possess the opinion that the separation between the ownership of fund and benefit right is the division of the trustee function in essence. Beside they are in the charge of different tasks, the most obligations of trustee and manager in the fund are same, both of them are responsible of take care of the fund assets. And the trustor and beneficiary are the same person, the manager and trustee are jointly trustee in the fund. Recently, The legislature promulgates The Securities Investment Fund Law which holds this position exactly!As the system innovation of modern finance trust, because of separating between the ownership and the beneficial rights, like similarly the modern company system, the contractual structure of Securities Investment Fund exists the separation of "ownership and management power", appears a typical kind of entrust relations. How overcome the " adverse-selection " and " moral hazard ", How guarantee the manager and the trustee to carry out the obligations according to the trust deed strictly, ensure maximizing the investor benefits and well, exactly be the essential reason of theories studying and lawmaking ruling among all countries.The studying of the fund contractual structure, is not purely from the angle of the trust legal system or comparison carrying on cognition and transplanting. Separated theory all right, united theory let it be, the difference of theory is due to the angle of recognition, its basic intent still is to resolve the agency problem that exists in the fund contractual structure, thus norm, control the illegal act of the manager and trustee validly, protect legal benefits of the investor in time and adequately.In May 2004, The Securities Investment Fund Law had produced effect formally. To the aggressive meaning of the Law, we should evaluate objectively. One hand we should see the forerunner, innovation, the other hand its shortage should not be ignored. Query to common trustee's mode, is the judgment thinking of the writer who has recognized and compared the fund contractual structure by carrying on the angle of the trusting and comparing. The suggestion of the protecting the fund investor right, then is an attempting effort that is focus on resolving and ruling the agency problem in the structure!...