Research On The Application Of Business Trust To Assets Securitization

After the wide spread of subprime lending crisis of the US, there is no deny that asset-securitization have made a contribution to the financial creation and development. On the other hand there is no deny that the legal system of asset-securitization isn’t prefer in financial regulation and the promotion the consumer. China began to pilot assets securitization in the year of2005, and it still in the infancy and exploration phase. There’re already some practices in the assets securitization, and most of them adopted the way of business trust in the process. Is it is more effective to chose business trust as the style of asset securitization? There isn’t legal framework of asset securitization, whether the application on business to asset securitization is barriers. And how to complete the legal system and to set up a legal frame for development of asset securitization? In this thesis, the application of business trust to asset securitization is to be object of study, the research methods of this thesis include economic analysis, empirical analysis and comparative analysis, the purpose of this thesis is to provide theoretical support for improving legal system and perfecting legislation of business trust applying to asset securitization.In addition to the introduction and conclusion, the main body of thesis is divided into four chapters.Chapter one is "an overview of business trust and assets securitization". The thesis defines assets securitization and the operation workflow of assets securitization. The goal is to set location of business trust to assets securitization. The thesis defines business trust by comparing the concept in two legal systems. Then the thesis shows the status quo of the business trust and its application to business in development. Business trust in the thesis refers to private trust established by business trustee specializing in the trust services to engage in business activity. Empirical study shows that business trust applying to three types of assets securitization including SPT, trust activity and trust relationship.Chapter two is "the institutional foundation of business trust applying to assets securitization." Through economic analysis mainly, the chapter shows that the assets securitization arise from reducing transaction costs and have two components including the independent assets and appropriate governance mechanisms. The multi-dimension analysis of the Contract Law, Property Law and the Organizational Law from the trust system itself provides a more comprehensive perspective. Business trust not only has independent trust property, but also has governance mechanisms to adapt to the asset characteristic in financial markets and to reduce the agency costs effectively. Based on this, business trust is able to establish and operate assets securitization in the relative integrity. Then this paper analyzing the function advantages of business trust applying to assets securitization." Business trust that is function-oriented and value-ended in applying to assets securitization is designed to solve the problems when the other business legal institutions cannot or are able to but the cost is too high. The advantages of business trust include:the flexible design function of governance mechanisms, check and balance function of the trustee’s powers and duties, bankruptcy remote function, as well as function of tax incentives and the use of these functions is a concrete manifestation of the advantages in various types of business relationship.Chapter three is "the investigation of the legislature and practices outside boarders". I choose U.S and continental legal system country, and analyze the legal about SPT and the clean risk of liquidation about business trust. According to this analysis result, we know how our legal system should be reasonable.Chapter four is "the investigation of the legislature and practices in china". According to the latest legislature and practices in China, this paper discusses the key issues in two kinds of securitization supervised by different authorities. While discovering the issues, this paper also provides constructive suggestions and thoughts for the solution of the issues and uses great effort on stating between the context on the current legal situation and relevant consideration of bankruptcy-remote mechanism of asset securitization in china. The thesis figures that business trust has an extensive and long-term development prospects in China. However, as an exotic from the traditional common-law system, business trust running conflict with the civil-law system followed by China inevitably.Chapter five is "to improve the legal system about business trust applying to assets securitization." Use the experience of establishing and perfecting the legal system about business trust in some civil-law countries, regions for reference, and in order to give full play to function advantages of business trust applying to assets securitization, we ought to revise and perfect "Trust Law" on a foundation of the existing legal system of China, establish and improve the trust industry legislation, as well as other complementary law and regulations. On the other hand relying on legal system, advance the improvement of bankruptcy-remote mechanism of asset securitization, and restates, in light of the current non-ideal situation of domestic legal system on securitization, the importance of strengthening the establishment of legal system and thereby building up the bankruptcy-remote mechanism of asset securitization in China.To draw the proper conclusions from this paper,"the demand and supply" is the main reason of business trust applying to assets securitization. First of all, to grantee the securitization, the asset must be independent and the trust property has the independent characteristics. Then to improve the economic efficiency, the asset securitization needs an efficient legal system. And the facial contract of business trust can sole this question. At last, to attract more investors, the asset securitization needs the limited liability of the property. Curious, by external relation of business trust, the limited liability is a characteristic. For our country, the attitude of assets securitization is feeling her way along inch by inch. However we should establish a legal system of business trust and assets securitization.