Research On The Rules Of Trustee’s Delegation Right

In2009, Measures for the Administration of Securities Registration and Clearingwas revised, which prohibited trust companies from applying for securities accountwhile allowing the partnership enterprises to apply for it. As a response, the trustcompany initiates the trust product of “Trust-Partnership” in order to deal with thesecurities account prohibition since September2010. The operation of“Trust-Partnership” is as follows: The investors subscribe the [Shares] of a CollectiveFund Trust Plan which is launched by a trustee, and the trustee of the Collective FundTrust Plan will function as a Limited Partner and form a fund. The trustee as aLimited Partner will obtain the profits from the fund and distribute it to thebeneficiaries. In essence, this innovative trust product is designed by trust company tomake downstream investment in securities market via a fund of Collective Fund TrustPlan, but it brings the conflicts between the department laws into spotlight.Trust Law of the People’s Republic of China (2001) requires the trustee shalloperate trust business himself and only under limited circumstances can the trusteedelegate its management to others. The trustee has violated this requirement sincePartnership Enterprise Law of the People’s Republic of China (2006) requires theLimited Partner may not interfere in the partnership affairs, which means the trusteeas a Limited Partner shall not deal with the trust business personally. The conflicts andinconsistency between these two department laws provoke the author’s thoughts onthe rules of trustee’s delegation right. The paper focuses on the rules of trustee’s delegation right, compares the rules oftrustee’s delegation right in different jurisdiction, analyzes the necessity of revisionour country rules of trustee’s delegation right through the practical example of“Trust-Partnership” innovative product and makes the suggestions to modify the rulesof trustee’s delegation right for improvement.The paper includes four chapters as follows:The first chapter explores the history of the rules of trustee’s delegation right andthe legal nature of the delegation right of the trustee.The second chapter makes inspection, sort-out and comparison about the rules ofdifferent countries featured by the common law system and the continental lawsystem, which is of use to understand the rules development and legislative status forthe rules of trustee’s delegation right and provide a reference for us to modify ourrules of trustee’s delegation right.The third chapter makes a theoretical and practical analysis for the rules oftrustee’s delegation right of China. At the theoretical level, the rules of trustee’sdelegation right of China require the trustee may entrust others to manage trustbusiness on the condition that the trustee can delegate its management for reasonsbeyond his control and the trustee shall bear liability for the management of the trustaffairs by entrusted third party. At the practical level, the entrustments of trustbusiness by the trustee as a Limited Partner investing the raising fund of CollectiveFund Trust Plan to the Limited Liability Partnership Enterprise of “Trust-Partnership”innovative product cannot be justified by the legal theories of the Trust Law and thetrustee shall bear the severer legal liabilities. The conflicts for theory and practice arethe key point to discuss for this paper, which reflect the rules of trustee’s delegationright cannot facilitate the development of Trust Industry.Chapter fourth gives the suggestions for modifying the rules of trustee’sdelegation right. This chapter advises to revise the scopes of delegation and thetrustee’s legal liability for entrustment of the rules of trustee’s delegation right withreference to2006Trust Act of Japan.